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Witness: Richard V. Gilbert 




E 


CDv^oyn 



BEFORE THE 

INTERSTATE COM&ERCE COMMISSION 


EX PARTE US 

INCREASED RAILWAY RATES, FARES, AND CHARCES, 1942 


Exhibits submitted on behalf of the Director of Economic 
Stabilization and the Price Administrator at Reopened 
Hearing, Febinary 2, 1943. 








$8 



















LIST OF EXHIBITS 



February 2, 1943. 


r\i 


CO 

Du 


Presented by the Office of Price Administration 
in Connection with Hearings Before the Interstate 
Commerce Commission on Petition for Re-Opening 
and Reconsideration, Fx Parte 148. 


E xhibit I. 
Chart 1. 


Net Railway Operating Income, 1941 and 1942, With and 
Without Rate Increase of Ex Parte 148, All Class I 
Railways. 


Table 1. Railway Operating Revenues, Operating Expenses, and 
Net Railway Operating Income, 1941 and 1942, All 
Class I Railways. 

Table 1A. Yield of Rate Increases Granted in Ex Parte 148, All 
Class I Railways. 

Table 2. Railway Operating Revenues, Operating Expenses, and 
Net Railway Operating Income, 1941 and 1942, Class 
I Railways, r astern District. 

Table 2A. Yield of Rate Increases Granted in Ex Parte 148, Class 
I Railways, Eastern District. 

Table 3« Railway Operating Revenues, Operating Expenses, and 
Net Railway Operating Income, 1941 and 1942, Class 
I Railways, Southern District. 

Table 3A. Yield of Rate Increases Granted in r x Parte 148, Class 
I Railways, Southern District. 

Table 4. Railway Operating Revenues, Operating Expenses, and 
Net Railway Ooerating Income, 1941 and 1942, Class 
I Railways, Western District. 

Table 4A. Yield of Rate Increases Granted in Ex Parte 148, Class 
I Railways, Western District. 


Ex hibit II. 

c 

Letter of April 6, 1942, from Mr. A. F. Cleveland, Chairman 
of the Committee of ‘Twenty-one, to Mr* John H. Eisenhart, Jr., 
Director of the Transportation and Public Utilities Section, 
Office of Price Administration, regarding the request of the 
OPA for the elimination of certain rate increases granted by 
the Interstate Commerce Commission. 



% 

















































2 


Exhibit III. 


Table 1. 

bet Railway Operating Income Before Federal Income 

Taxes, Net Fixed Charges, and Net Income Before 
and After Federal Income Taxes, 1941 and 1942, 

All Class I Railways 

Exhibit IV. 



Maintenance, Depreciation, and Retirements Series. 
Definition of Terms and Summary of Tables. 


Table 1. 

i 

Maintenance, Depreciation, and Retirements of Equip¬ 
ment, and Way and Structures, 1929-1942, All Class 

I Railways. 

Table 2. 

Maintenance, Depreciation, and Retirements of Equip¬ 
ment and "ay and Structures, and Selected Operating 
Data, 1929-1942, All Class I Railways. 

Table 3. 

Maintenance, Depreciation, and Retirements of Equip¬ 
ment and “’ay and Structures, and Selected Operating 
Data, 1929-1942, All Class I Railways. 

Table 4» 

Maintenance, Depreciation, and Retirements of Equip¬ 
ment and Way and Structures, and Selected Mainten¬ 
ance Data, 1929-1941, All Class I Railways. 

Table 5. 

Serviceable Cars and Locomotives, 1931-1942, Class I 
Railways and Switching and Terminal Companies. 

Table 6. 

Indexes of Selected Financial and Operating Data, 
1929-1942, All Class I Railways. 

Table 7. 

Materials and Supplies Inventories, 1941-1942, All Class 

I Railways. 

Table 8. 

Maintenance, Depreciation, and Retirements of Equipment 
and Way and Structures, and Amortization of Defense 
Projects, 1941-1942, All Class I Railways. 


Exhibi t V. 


Table 1. 

Estimated Cost of Facilities Covered by Certificates 
of War Necessity and Amortization of Defense Pro¬ 
jects Charged by Class I Line-Haul Railways, 1940-1942. 

Table 2. 

Gross and Net Additions and Betterments and Debt 
Reductions Without Resort to Cutside Financing - 
24 Selected Class I Railways. 













o - 


(revised 2/5/43) 


Exhibit V (Cont'd.) 


Table 3. Par Amount of Equipment Trust Certificates Offered 
by Class I Railways, 1941, 1942. 


Taole 4. Age Distribution of Revenue Freight Carrying Cars 
and Passenger Train Cars. 

Exhibit VI. 

"Rail Performance in 1942", Article by J. J. Pelley, President, 
Association of American Railroads. 



Exhibit VI-A . 

Statement of Mr. R. V. Fletcher, Vice-President, Association 
of American Railroads, Regarding Abandonments. 

Chart 1 - Abandonments, Railroads - 1942. 

Exhibit VI-3 . 

Testimony of L. R. Capron in Docket 28300, Class Rate Investi¬ 
gation, September 25, 1942. 


Exhibit VII . 

Table 1 . Railway Operating Revenues, Operating Expenses and 

Ret Railway Operating Income Before Federal Income 
Taxes, 1941-1943, All Class I Railways. 

Table 2. Operating Revenues of Class I Railways, Aggregate 
and Per Transportation Unit, 1938-1943. 

Table 3. Revenue Passenger-Miles, By Months, January 1940 to 
December 1943. 

Table 4. Revenue Ton-Miles, By Months, January 1940 to Decem¬ 
ber 1943. 


Table 5. Operating Ratios of Class I Railways, 1938-1943. 

Appendix - Method of Forecasting Railway Traffic Volume, Rev¬ 
enues and Expenses for 1943, All Class I Railways. 















Exhibit VIII. 


Table 

Table 

Exhibit 

Table 

Table 

Chart 

Table 

Table 

Table 

Exhibit 

Table 

Chart 

Table 


1* Income Before Federal Income Taxes, After All War¬ 
time Taxes, and After Normal Tax Only, 1942, All 
Class I Railways. 

2. Net Income and Peace-time and War-time Federal In¬ 
come Taxes, 24 large Class I Railways, 1942. 


IX. 

1. Railway Operating Revenues, Operating Expenses, and 

Met Operating Income Before Federal Income Taxes, 
1921 to 1942, All Class I Railroads. 

2. Compensation to Employees, Actual Amount, Percent 

of Railway Operating Revenues and Expenses and 
Operating Ratio, 1929-1942, All Class I Railways. 

1. Operating Ratio of Class I Railways, Selected Years 
‘and. 1936-1942. 

3. Railway Operating Expenses by Major Components, 

1921-1942, 411 Class I Railways. 

4. Cost and Consumption of Fuels, Class I Railroads, 

Monthly, 1941 and 1942. 

5. Unit Returns and Expenses of Class I Railways, 

Monthly, 1941 and 1942. 


X. 

1. Net Railway Operating Income Before Federal Income 
Taxes, Non-Operating Income, Total Deductions 
from Income and Net Income Before and After Fed¬ 
eral Income Taxes, 1921 to 1942, All Class I 
Railroads. 

1. Net Income of Class I Railways, Before and After 

Federal Income Taxes, 1921-1942. 

2. Net Railway Operating Income, Before Federal Income 
and Excess Profits Taxes, As a Percent of Oper¬ 
ating Revenue, All Class I Railways, 1921-1942. 

Net Railway Operating Income as Percent of Operating 
Revenues, Class I Railways, 1921-1942. 


Chart 2. 

















































\ 
















Exhibit XI 


- 5 - 


Statement of Railroad Representatives to Congressional Committees 
Respecting Income Taxes. 


Exhibit XII . 

Table 1. Selected Balance Sheet Accounts, 1929, 1940, 1941, 
1942, Class I Line-Haul Railways. 


Table 2. Long Term Debt Actually Outstanding and Current 
Liabilities, Class I Line-Haul Railv/avs, 1929, 
1940, 1941. 


Exhibit XIII . 

Table 1. Railway Operating Revenue, Railway Operating Expenses, 
and Net Railway Operating Income Before Federal In¬ 
come Taxes Per Traffic Unit, 1929-1942. All Class 
I Railways. 


Exhibit XIV . 

Chart 1. Revenue Ton-Miles and Average ' : eekly Carloadings, All 
Class I Railroads, Monthly, 1939-1942. 

Exhibit XIV-A . 

Press Release of OWI and ODT, January 23, 1943, Regarding Ef¬ 
fects of ODT General Order No. 1. 

Exhibit XIV-B . 

Press Release by G"T and CDT, December 24, 1942, on Effects of 
Operation of ODT General.Order No. IP. 


Exhibits XV-A , XV-B and XV-C . 

First, Second and Third Quarterly Reports of the Office of Price 
Administration (Submitted Separately). 


Exhibit XVI . 

Table 1. United States Government War Expenditures and Federal 
Reserve Index of Industrial Production, Monthly, 
1940-1942. 

Table 2. Gross National Froduct in the United States, 1939-1942, 
Annual Rates by Quarters. 

















■ 
















.. i 


i *'■ 




‘ 

. 















- 6 - 


Exhibit XVII. 


Chart 1. Production and Income, 1923-1939. 


Exhibit XVIII-A . 

Sixty-five OPA Actions Which Have Reduced the Maximum Prices 
Previously Set in OPA Regulations. 

Exhibit XVIII-B . 

Sixty-five OPA Actions Which Have Reduced Prices Below Previously 
Prevailing Market Levels, Or Which Have Denied Generally Re¬ 
quested Price Increases. 


E xhibit XIX . 

Subsidies Being Paid by Federal Government to Offset Pressure 
of Increased Transportation. 


Exhibit XX. 

Table 1. Indexes of Corporate Profits, Wages and Net Farm Income. 


Table 2. Profits Before Federal Income Taxes, 1936-1942, Rail¬ 
way, Industrial and Public Utility Corporations. 


Chart 1. 

Exhibit XXI 
Table 1. 

Chart 1. 

Table 2. 

Chart 2. 
Chart 3* 

Chart 4. 


Profits Before Federal Income Taxes, 1936-1942, Rail¬ 
way, Industrial and Public Utility Corporations. 


Increases in Prices Paid by Railroads, World War I 
and World War II. 

Increases in Prices Paid by Railroads, World War I 
and ^orld War II. 

Railroad Material Prices, Selected Dates, May 1933 
to December 1942. 

Average Cost of Coal and Fuel Oil Consumed by Railroads. 

Comparative Trends in Prices of Railroad Appliances, 
January 1929 = 100. 

Comparative Trends in Track Material Costs. 













- 7 - (revised 2/5/43) 


Exhibit XXII . 

Press Release of Pederal Communications Commission Announcing 
Reduction in Telephone Rates. 

Exhibit XXIII. 


Effects of a 10 percent Price Increase. 


Exhibit XXI'V-A . 

OPA Refusal to Grant Requested Increase in Maximum Price for 
Cigarettes. 

Exhibit XXIY-B . 

/ 

OPA Refusal to Grant Requested Increase in Maximum Price for 
Puel Oil. 


Exhibit XXV. 


Chart 1. Wholesale Prices, Controlled and Uncontrolled. 

Chart 2. Wholesale Prices in First World War and in Present 
War, On Commodities Other Than Farm Products and 
Foods. 


Chart 3. Wholesale Prices in the Third Year of War, Farm Prod¬ 
ucts, Foods and Industrial Products. 

Chart 4. Wholesale Prices, the Effectiveness of Price Control. 


Chart 5. Wholesale Prices, the Effectiveness of Price Control 
(3v Types of Industrial Products). 

Chart 6, Wholesale Prices of Metals in First and Present World 
Wars. 

Chart 7. Wholesale Prices of Building Materials, in First and 
Present World Wars. 

















Exhibit XXV-B. 


Table 1. Upward Revisions in OPA Price Ceilings Arising from 
Increased Freight Rates. 


E xhibit XXVI-A . 

Excerpts from British Command Paper, "Government Control of 
Railways". 


E xhibit XXVI- B. 

Excerpt from Bulletin to Administrators of the War Prices and 
Trade Board Regarding Railway Rates. 


Exhibit XXVII . 

Extract from "Outlook for the Security Markets", Regarding 
Prospects for Railroad Earnings. 













0 P A EXHIBIT I 
CHART I 


NET RAILWAY OPERATING INCOME 

1941 AND 1942 WITH AND WITHOUT 
RATE INCREASE OF EX PARTE 148 
ALL CLASS I RAILWAYS 


DOLLARS 

(BILLIONS) 


1942 

AT CURRENT RATES 


DOLLARS 

(BILLIONS) 



1942 


EXCLUDING RATE 
increased GRANTED 
BY EX PARTE 148 


■>£ Before Federal Income and Excess Profits Taxes 
VJRCE Dota from Interstate Commerce Commission 
Estimates from Exhibit I, Table I. 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO 320T 


I-1M9 



























































































O.P.A. Exhibit I - 1 


TABLE 1.-RAILWAY OPERATING REVENUES, OPERATING EXPENSES, AND NET 
RAILWAY OPERATING INCOME, 1941 AND 1942 

all class i railways 


Year 

(1) (2) 

Railway Railway 

Operating Operating 

Revenues Expenses 

(millions of dollars) 

(3) 

Net Railway 

Operating Income 
Before Federal 

Income Taxes 

i. 19 a 

5347 

3664 

13-72 

2. 1942 at current 

rates 

7439 

4578 

2246 

3. 1942 without rate 

increase 

4. Increase 1942 exc. 

7139 

4578 

1946 

rate inc. over 19a 

(a) Dollars 

1792 

914 

774 

(b) Percentage 

33.5 

24.9 

66.3 


Sources: Line 1 - Interstate Commerce Commission, Preliminary Abstract of 

Railway Statistics for year ended December 31 , 1941. 

Line 2 - Interstate Commerce Commission, Monthly Comment on 
Transportation Statistics, January 7, 1943. 

Line 3 - Estimated from yield of rate increase on basis of 4.756 

increase in freight rates and a 9/6 increase in passenger 
fares; and from Line 2. 

t 

Line 4a - Line 3 less Line 1. 

Line 4b - Percent increase, Line 3 oyer Line 1* 


Note: Railway operating expenses include and net railway operating income 
is reduced by 60-month amortization of defense projects* For the 
first ten months of 1942 amortizations amount to $65>710,086. 
















ml ■>» 























' 








O.P.A. Exhibit I - 1 A 


TABLE 1 A.- YIELD OF RATE INCREASES GRANTED IN EX PARTE 148 

ALL CLASS I RAILWAYS 



(i) 

Passenger 

Revenues 

(2) 

Freight 

Revenues 

(3) 

Total 

Increase 


(millions of dollars) 

1* Total 1942 revenues 

2. Revenues for first three months, 1942 

3. April-Deeember 1942 revenues 

4. 14/31 of March 1942 revenues 

5. March and 19/28 of Feb. 1942 revenues 

1050 1/ 
170 2/ 
880 

96 2/ 

5895 1/ 
1216 2/ 
4679 

201 2/ 


6. Total revenues affected by Ex Parte 148 

7. Revenue at 1941 rates 

8. Yield of rate increases granted 

in Ex Parte 148 

976 2/ 
89? i/ 

81 

4880 Lj 
466I 6/ 

219 

ioo 


l/ Actual through November and estimated for December by the Interstate 
Commerce Commission, "Monthly Comment on Transportation Statistics," 
January 7, 1943* 


2/ Interstate Commerce Commission, M-100. 

jl/ Passenger revenue from February 10, 1942 to December 31, 1942. 
ij Freight revenue from March 18, 1942 to December 31 > 1942. 

j Sj Total passenger revenue affected by Ex Parte 148 divided by 109$• (Associa' 
tion of American Railroads pamphlet "Are Railroads Making Too Much 
Money?") 

6/ Total freight revenue affected by Ex Parte 148 divided by 104*7$. 

(Association of American Railroads pamphlet "Are Railroads Making too Much 
Money?") 


1-2553 nobu-wp 
























O.P.A. Exhibit 1-2 


TABLE 2.- RAILWAY OPERATING REVENUES, OPERATING EXPENSES, AND NET 
RAILWAY OPERATING INCOME, 1941 AND 1942, 

CLASS I RAILWAYS, 

EASTERN DISTRICT 


Year 

(1) (2) 

Railway Railway 

Operating Operating 

Revenues Expenses 

(millions of dollars) 

(3) 

Net Railway 
Operating Income 
Before Federal 
Income Taxes 

1, 1941 

2331 

-1637 

465 

2, 1942, actual 

3072 

2002 

792 

3, 1942, without rate 

increase 

2947 

2002 

667 

4« Increase 1942 exc. 
rate inc. over 1941 

(a) Dollars 

616 

365 

202 

(b) Percentage 

26.4 

22.3 

43.4 


Sources: Line 1 - Interstate Commerce Commission, Preliminary Abstract 

of Railway Statistics for the year ended December 31, 
1941. 


Line 2 - First eleven months. Interstate Commerce Commission, 
Statement M-100, December estimated. 


Line 3 - Estimated from yield of rate increase on basis of 4.7^ 

increase in freight rates and a 9% increase in passenger 
fares; and from Line 2. 


Line 4a - Line 3 less Line 1. 

Line 4b - Percent increase. Line 3 over Line 1. 

Note: Railway operating expenses include and net railway operating income 
is reduced by 60-month amortization of defense projects. 




















O.P.A. Exhibit I - 2 A 


TABLE 2 A. - YIELD OF RATE INCREASES GRANTED IN EX PARTE 148 

CLASS I RAILWAYS 
EASTERN DISTRICT 


( 1 ) ( 2 ) 

Freight Fassenger 

Revenue Revenue 

(thousands of dollars) 


(3) 

Total 

Revenue 

Increase 


1. Total 1942 revenues 

2. Revenues for first 3 months, 1942 

3. April-December 1942 revenues 

4. 14/31 March 1942 revenues 

5. March and 19/28 Feb. 1942 revenues 

6. Total revenue affected by Ex Parte 148 

7. Revenues at 1941 rates 

8. Yield of rate increases granted in 

Ex Parte 148 


2,381,000 1/ 
509,753 2/ 
1/871,247 
85,040 2/ 


1,956,287 3/ 
1,868,469 5/ 
87,818 


484,000 1 / 

82,291 2/ 

46,272 2/ 

447,981 4/ 

410,992 6/ 

'”56,989 124,807 




l/ Actual through November and estimated for December on a pro rata basis. 
2/ Interstate Commerce Commission ; M-100. 

3/ Freight revenue from March 18, 1942 to December 31, 1942. 

4/ Passenger revenue from February 10, 1942 to December 31, 1942. 

5/ Freight revenue affected by Ex Parte 143 divided by 104.7 percent 
(Association of American Railroads, pamphlet "Are Railroads Making 
Too Much Money?") 

6/ Passenger revenue affected by Ex Parte 148 divided by 109 percent 
(same source as in footnote 5). 



















/ I 




































O.P.A. Exhibit 1-3 


TABLE 3.- RAILWAY OPERATING REVENUES, OPERATING EXPENSES, AND NET 
RAILWAY OPERATING INCOME, 1941 AND 1942, 

CLASS I RAILWAYS, 


SOUTHERN DISTRICT 


Year 


a) 

Railway 

Operating 

Revenues 


( 2 ) 

Railway 

Operating 

Expenses 


(millions of dollars) 


(3) 

Net Railway 
Operating Income 
Before Federal 
Income Taxes 


1 . 1941 

1011 

638 

296 

2. 1942, actual 


813 

513 

3. 1942, without rate 

increase 

1364 

813 

455 

4. Increase 1942 exc. 
rate inc. over 1941 

(a) Dollars 

(b) Percentage 

353 

34.9 

175 

27.4 

159 

53.7 


Sources: 



Line 1 - Interstate Commerce Commission, Preliminary Abstract 
of Railway Statistics for the year ended December 31 > 
1041 . 

Line 2 - First eleven months. Interstate Commerce Commission, 
Statement M-100, December estimated. 

Line 3 - Estimated from yield of rate increase on basis of 4*7% 

increase in freight rates and a 9% increase in passenger 
fares; and from Line 2. 

Line 4a - Line 3 less Line 1. 

Line 4b - Percent increase, Line 3 over Line 1. 


Note: Railway operating expenses include and net railway operating income 
is reduced by 60-month amortization of defense projects. 













. 












I 5 II 

* . 






































































, 






, 




































O.P.A. Exhibit I - 3 A 


TABLE 3 A.- YIELD OF RATE INCREASES GRANTED IN EX PARTE 148 

CLASS I RAILWAYS 

SOUTHERN DISTRICT 



( 1 ) 

(2) 

(3) 

* 

Freight 

Passenger 

Total 


Revenue 

Revenue 

Revenue 




Increase 


(thousands of dollars) 


1. Total 1942 revenues 

1,147,000 1/ 

203,000 1/ 


2. Revenue for first 3 months, 1942 

240.633 2/ 

_32 J 3H 2/ 


3. April-December 1942 revenues 

906,367 

170,186 


4. 14/31 March 1942 revenues 

32,898 2/ 



5. March and 19/28 Feb. 1942 revenues 


16,768 2/ 


6 . Total revenue affected by Ex Parte 148 

939,265 i/ 

186,954 V 


7. Revenues at 1941 rates 

897.101 5/ 

171.517 6/ 


8 . Yield of rate increase granted 

42.164 

15.437 

57,601 

in Ex Parte 148 





a Actual through November and estimated for December on a pro-rata basis. 

♦ 

2/ Interstate Commerce Commission, M-100. 

2J Freight revenue from March 18, 1942 to December 31, 1942. 

tj Passenger revenue from February 10, 1942 to December 31> 1942. 

/ Freight revenue affected by Ex Parte 148 divided by 104.7$. (Association 
of American Railways pamphlet "Are Railroads Making too Much Money?”) 

6 / Passenger revenue affected by Ex Parte 148 divided by 109$. (Association 
of American Railways pamphlet "Are Railroads Making too Much Money?") 


* 


1-2553 nobu-wp 



















V 







































O.P.A. Exhibit 1-4 


TABLE 4.- RAILWAY OPERATING REVENUES, OPERATING EXPENSES, AND NET 
RAILWAY OPERATING INCOME, 1941 AND 1942, 

CLASS I RAILWAYS 

WESTERN DISTRICT 



(i) 

(2) 

(3) 


Railway 

Railway 

Net Railway 

Year 

Operating 

Operating 

Operating Income 


Revenues 

Expenses 

Before Federal 
Income Taxes 


(millions of dollars) 



1. 1941 

2005 

1339 

4H 

2. 1942, actual 

2945 

1763 

941 

3. 1942, without rate 

increase 

2828 

1763 

824 

4. Increase 1942 exc. 
rate inc. over 1941 

(a) Dollars 

823 

374 

413 

(b) Percentage 

41.0 

26.9 

100.5 


Sources: Line 1 - Interstate Commerce Commission, Preliminary Abstract 

of Railway Statistics for the year ended December 31 > 
1941. 


Line 2 - First eleven months. Interstate Commerce Commission, 

Statement M-100, December estimated. 

% 

Line 3 - Estimated from yield of rate increase on basis of 4.7$ 

increase in freight rates and a 9% increase in passenger 
fares; and from Line 2. 

Line 4a - Line 3 less Line 1. 

Line 4b - Percent increase, Line 3 over Line 1. 

Note: Railway operating expenses include and net railway operating income 
is reduced by 60-month amortization of defense projects. 











\ 


O.PJL. Exhibit I - 4 A 


TABLE 4 A.- YIELD OF RATE INCREASES GRANTED IN EX PARTE 148 

CLASS I RAILWAYS 
YESTERN DISTRICT 


(1) 

(2) 

(3) 

Freight 

Passenger 

Total 

Revenue 

Revenue 

Revenue 



Increase 


(thousands of dollars) 



1# Total 1942 revenues 
2* Revenues for first 3 months, 1942 

3. April-December 1942 revenues 

4. 14/31 March 1942 revenues 

5* March and 19/28 February 1942 
revenues 

6. Total Revenue affected by Ex 
Parte 148 

7* Revenues at 1941 rates 
8* Yield of rate increases granted 
in Ex Parte 148 


2,367,000 1/ 
465,030 1/ 
1,901,970 
76,281 2/ 


1,978,251 3/ 

1,889,447 5/ 
88,804 


365,000 1/ 

54,444 2/ 

308,556 

30,702 2/ 

339,258 4/ 

311,246 6/ 

28,012 116,816 


l/ Actual through November and estimated for December on a pro-rata basis* 

2/ Interstate Commerce Commission, M-100* 

3/ Freight revenue from Maroh 18, 1942 to December 31, 1942* 

4/ Passenger revenue from February 10, 1942 to December 31, 1942* 

5/ Freight revenue affected by Ex Parte 148 divided by 104*7/6. (Association 
of Amerioan Railroads pamphlet "Are Railroads Making Too Much Money?") 

6/ Passenger revenue affected by Ex Parte 148 divided by 109^* (Same source 
as in footnote 5). 


/ 


1-2553 nobu-wp 

























































































' 



































A. F. CLEVELAND 
Vick president 


Association of American Railroads 

TRAFFIC DEPARTMENT 

TRANSPORTATION BUILDING O.P.A. Exhibit II 

Washington. D. C. Page i of 6 

April 6, 19i|2. 

1-3200-1 


Request of the Office of Price Administration for the 
elimination of the increases authorized by the Inter¬ 
state Commerce Commission in Ex Parte llj.8 on specific 

commodities. 


John H. Eisenhart, Jr., Esq., 

Director of Traffic, 

Office of Price Administration, 

Washington, D. C. 

Dear Mr. Eisenhart: 

At a meeting in Chicago of the Ex Parte ll\B Committee which had been 
created pursuant to request of Director Eastman of The Office of Defense Trans¬ 
portation, the recuest of your organization for elimination of the increases 
granted by the Interstate Commerce Commission on certain commodities was fully 
considered in the light of the presentation made verbally at the New York meet¬ 
ing and the written statements that were left with me, and, for reasons which 
will be later set forth, the Committee concluded that it could not see its way 
clear to make any of the reductions which you and your associates requested. 

In the main, the statements of the price executives of the Office of 
Price Administration presented two principal reasons why in their judgment the 
elimination of the increases authorized by the Interstate Commerce Commission 
should be removed in full, except as to one commodity. These reasons wore - 

1. That an increase in freight rates would tend to create an 

inflationary spiral; and 

2. That on some of these commodities, not all, price ceilings 

had been placed by the Office of Price Administration 
and if there were any increases in the freight rates 
on such commodities it would necessitate revisions of 
the price ceilings, resulting in a tremendous amount 
of work. 

Tliere were other but minor reasons given, among which were (a) in some 
instances water transportation was no longer available and it was felt that the 
railroads ought to make their rates lower than reasonable rates because of the 
necessity of using rail service, and (bj that there existed a scarcity of the sup¬ 
ply of certain essential materials, among which were scrap iron and scrap materials 
of various descriptions. 

It was made clear that the request which you were making at the New 
York meeting was not comolete, it being stated definitely that -chore would be a 
later application involving the i’wiensc movement of food products. Furthermore, 
it was strongly intimated that if freight revenues for February and Parch in¬ 
creased to the same extent that they had in January, efforts would oe made to 
have cancelled all of the Fx Parte llj.8 increases. 








John H. Eisenhart, Esq.-2 


O.P.A. Exhibit II 
Page 2 of 6 


/ 

You estimated that your incomplete request would produce a reduction 
of only ^0,000,000 per annum. Computations made by the carriers indicate that 
your estimate is at least $11,000,000 too low. 

The Traffic Committee in considering this subject had before it the 
fact that the occasion for the railroads 1 petition in Ex Parte II 4.8 was that 
through operation of law and governmental mediation their operating expenses had 
been increased some $ 351 > 771>000 as a result of the wage increase and that other 
increased expenses would bring this figure up to more than $360,000,000 per annum. 

The President's Fact Finding Board in its decision found that it was 
necessary for the railroads to have adequate earnings during this period of 
emergency and it predicted that what it gave in its recommendation (which was in¬ 
creased by some flj.0,000,000 after mediation, when the railroad labor groups would 
not accept it) would necessitate the railroads making application for increases 
in their charges. 

The result of the Commission's decision in this proceeding gave to the 
carriers on the Commission's estimate $203,000,000 additional freight revenue per 
annum and about $ 14 . 6 , 000,000 per annum from increasing passenger fares. The result 
of this decision therefore was more than §111,000,000 less than the railroads be¬ 
lieve they should have received. 

With the above figures in mind, it will be noted that the incomplete re¬ 
quest presented by the Office of Price Administration would reduce the Commission's 
award by some fifteen percent based upon your estimate and by about twenty percent 
based upon the railroads' estimate. It was felt that the railroads could not con¬ 
sistently make any such reduction in what they consider an insufficient increase to 
meet their rising expenses in operation. 

This committee did not consider that the railroads by retaining the in¬ 
creases granted by the Commission could be charged with responsibility for any 
tendency^, toward inflation. The President's Fact Finding Board recognized the pos¬ 
sibility of an inflationary tendency when it made its recommendations for a sub¬ 
stantial increase in railroad operating costs but at the same time it also recog¬ 
nized the fact that under present conditions it is in the interest of the public 
and the government that the railroads should have revenues sufficient to permit 
them to respond to the unusual necessities put upon them by the various branches 
of government. 

The railroads' operating expenses having been increased as a result of 
the findings of the President's Fact Finding Board and the subsequent government 
mediation proceeding and the Interstate Commerce Commission after full hearing 
having granted in part the railroads' petition for increased rates, fares and 
charges to compensate for such increased operating expenses, the Committee be¬ 
lieves that the relatively small increases in rates on the commodities covered by 
the request of the Office of Price Administration could not possibly result in 
"speculative, unwarranted and abnormal increases in prices" such as mentioned in 
’•he Act under which the Office of Price Administration functions. 



i.ac9a-«0Bu-Ptnrp 







































John H. Eisenhart, Jr., Esq.-3 


O.P.A. Exhibit II 
Page 3 of 6 


It is feared and believed that there is a tendency to automatically 
consider that an increase in freight rates oh a commoditv amounting to 3*^ or 
6%, as the case might be, will increase the delivered cost of that commodity by 
3fj or b c /z 9 whereas opviously that increase has been applied only to that portion 
of the delivered cost which is caused by the payment of railroad transportation. 

The Committee concluded it could not accept as a valid reason in sup¬ 
port of the removal of these necessary increases in rates the statement that un¬ 
less such increases are removed the refiguring of the price ceilings would be 
necessitated. 

It should also be borne in mind that these railroads, especially in this 
time of national emergency, must have sufficient revenues to pay their operating 
expenses and other costs. The ihcreases granted by the Commission will produce 
far less increased revenues than the carriers feel are necessary to meet their 
increased costs. The Commission apparently relied upon increased traffic in 19k2 
as justification for granting less than the railroads originally requested but in 
apparent recognition of the possibility of future conditions not being as favor¬ 
able as predicted, it left the record open for such later modifications and re¬ 
adjustments as future conditions might justify. If the increases granted by the 
Commission on these particular commodities are entirely eliminated as requested by 
the Office of Price Administration, the result would be, as before stated, to pro¬ 
duce some $ljJ.,000,000 less revenue than granted by the Commission and this would 
require that such reductions of approximately $1_J.,000,000 be made up by further 
increases in the freight rates on the remaining commodities. 

The following brief comments are offered in connection with the individual 
commodities < 


CEMENT, NATURAL AND PORTLAND. 

Cement rates throughout the Urited States are generally on, or below, 
bases prescribed or approved by the Interstate Commerce Commission. Of 
late years an evolution in the method of shipping of cement has decreased 
the shipper's expense of forwarding and the receiver's expense in receiv¬ 
ing of much of this commodity, at the same time increasing the expense of 
the railroads. 

i 

IRON AND STEEL SCRAP, NOT COPPER CLAD. 

Scrap iron has long moved in heavy volume by the railroads and on rates 
adjusted usually after conference with shippers and receivers to meet com¬ 
petitive and commercial conditions, or prescribed by the Interstate Commerce 
Commission. These rates are on such a low basis that this commodity should 
bear its fair share in connection with any general increase in rates. 

From recent applications and negotiations it is the belief of the rail¬ 
roads that the principal desire now is to bring forth scrap which on account 
of its light nature has until recently been deemed as not needed or available. 
Requests have been made for reductions in rates on light scrap, both in the 
matter of minimum weights and rates. In some of the more populous territories 


1-aoaa-aQBD-KJ-ip 















































John H. Eisenhart, Jr., Esq.-lj. 


O.P.A. Exhibit II 
Page 4 of 6 


these applications have been declined after investigation because it has 
been believed that the reductions requested would not cause this traffic 
to be moved to concentration points by rail. In other territories, in 
some cases, these requests have been granted but have been productive 
of little result. 

LEAD AND ZINC ORES AID CONCENTRATES. 

The rates are presently maintained generally on a low basis and no 
justification has been advanced, in our opinion, for special treatment 
on these commodities. 

LUMBER AND LUMBER PRODUCTS AS FROM THE SAW OR 
PLANING MILL, INCLUDING LOGS, PILING, POLES, 

SPaRS, AND TIES, BUT NOT INCLUDING FINISHED 
PRODUCTS. 

As to lumber and lumber products it may be stated that generally 
speaking few rates' are in effect which represent a normal reasonable basis. 

In most sections of the country these rates have been revised in recent 
years to reflect competition with motor and water carriers and in competi¬ 
tion with competitive building materials. Rates on competitive building 
materials were increased along with the rates on lumber and lumber products. 
Speaking generally, the history of the present rate adjustment on lumber and 
lumber products is such that no justification can be found for these commod¬ 
ities not contributing to the increased operating expenses, relatively, along 
with other classes of traffic and particularly competing substitutes. 

NON-FERROUS SCRAP, VIZ; COPPER AID LEAD, INCLUDING 
SCRAP BATTERY PLATES. 

Obviously, the main demand for non-ferrous scrap metals is for re¬ 
clamation of the metal. The value of these scrap metals depends upon the 
value of the primary metals. The committee sees no reason why special treat¬ 
ment should be accorded to the scrap metals which is not accorded to other 
commodities including the primary metals. 

PETROLEUM AND PETROLEUM PRODUCTS, VIZ.: CRUDE PETROLEUM, 

GASOLINE, LIQUEFIED PETROLEUM GASES, TRACTOR DISTILLATES, 

AND SIMILAR TYPE MOTOR FUEL OTHER THAI GASOLINE, KEROSENE, 

INCLUDING RANGE OIL OR STOVE OIL, DISTILLATE BURNING, HEAT¬ 
ING OR FUEL OILS, DIESEL FUEL OILS, RESIDUAL BURNING OR 
HEATING FUEL OILS, LUBRICATING OILS, INCLUDING MOTOR, 

AVIATION AND STOCK OILS, AID ASPHALT AND ASPHALT PRODUCTS. 

Probably no commodity handled by the railroads he.s had more special 
treatment during the past few years than petroleum and its products. The 
rates today are generally far below maximum reasonable rates as prescribed 
by the Interstate Commerce Commission due to changed conditions. In ad¬ 
dition, recent reductions have been made from a wide territory of origin 
to a wide territory of destination in order to help relieve a serious situa¬ 
tion at the Atlantic seaboard and adjacent territory. Petroleum rates, 


1-2592-KOBO-PU-WP 










































iHH 







































John 




H. ELsenhart, Jr., Esq.-5 


O.P.A. Exhibit II 
Page 5 of 6 


increased 6 per cent, are still far below a reasonable maximum basis 
and it is inconceivable, with the revenue needs of the carriers, that a 
commodity moving in such large volume snd at such low rates should not 
stand its share of the increased operating costs. The expenses in con¬ 
nection with handling of this traffic under existing conditions are very 
much greater than normally, as expedited movements are required on both 
the loaded hauls and the returned empty hauls. 

PIG IRON. 

The rates on pig iron are generally on low bases where movements have 
heretofore taken place by railroad, and the carriers have generally accord¬ 
ed low commodity rates to the unusual movements, such as those from northern 
and eastern producing points to southern destinations created by reason of 
national defense activities. 

Ihe chief effort to justify special treatment for pig iron was predicated 
upon a situation designated as "dislocated pig iron," but, by the figures 
presented, it was shown that "dislocated pig iron" in volume consisted of 
a very small proportion of the whole movement by rail. 

The committee believes that there is no reason why pig iron should not 
bear the same measure of increase as on general classes -of traffic, includ¬ 
ing other items of iron and steel. 

RUBBER SCRAP. 

In the opinion of the committee the general objection to refiguring 
the ceiling on rubber scrap was substantially the only reason presented. 

The committee did not believe that this is justification for removal of the 
increase. 


CRUDE SULPHUR. 

The rail rates on crude sulphur between all points are on a very low 
basis and to a very considerable extent such rates have been very much de¬ 
pressed because of competition with ocean vessels, barge movements, lake 
movements, frequently coupled with short truck movements between the ports 
and points where used, much of which competition does not exist today or is 
not present to the same extent as heretofore. 

Your request was limited to rates on sulphur from Southwestern territory 
to North Atlantic seaboard points, Hampton fioads ports and north, in con¬ 
nection with which the statement was made that the existing rates were "paper" 
rates and were not made with the intention of moving traffic. YJhile in for¬ 
mer years there was little or no all-rail movement of sulphur from the South¬ 
west to such North Atlantic ports, conditions have changed, with the result 
that the present low basis of rates was established in August, 19^P-, with the 
intention of moving traffic by railroad. In fact, many thousands of tons of 









John H. Eisenhart, Jr., Esq.-6 


O.P.A. Exhibit II 
‘Page 6 of 6 


sulphur have freely moved on such rates. The thought seems to prevail 
that because boats have been diverted to other services the railroads 
should now be expected to establish rates approximately the same or but 
little higher than the charges formerly made by steamships and ignores the 
fact that heretofore the railroads generally either did not compete with 
or exactly meet the charges of the steamships but only met such competi¬ 
tion to the extent and on bases of rates they could afford to operate. 

Your presentation seemed to refer more to the measure of rates by water 
versus rail than to the 6 percent increase. 


The railroads acting through their Committee feel that, as before stated, 
the representations made by the Office of Price Administration are not such as to 
justify them in eliminating the increases permitted by the Commission on the speci¬ 
fied commodities, and they cannot assume the responsibility of so radically reducing 
their present revenues. Furthermore, we again emphasize the fact that any increases 
in prices caused by these increases in freight rates brought about under the condi¬ 
tions recited and as approved by the Commission are not in the category of speculative, 
unwarranted or abnormal increases in prices such as the Office of Price Administration 
was presumed to prevent. 


Very truly yours. 



1-2582-NOBU.PO-WP 























; 




' 
























































































■ 

■ I 










‘ 
















TABLE I - NET RAILWAY OPERATING INCOME BE!ORE FEDERAL INCOME TAXES, NET FIXED 
CHARGES, AND NET INCOME BEFORE AND AFTER FEDERAL INCOME TAXES, 1941 AND 1942 

ALL CLASS I RAILWAYS 


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1-255 3 nobu-wp 









































































































O.F.A. Exhibit IV 
Page 1 of 10 


Maintenance, Depreciation, and Retirements Series 

Tables Presented in Connection with Ex Parte 148 


Definition of terms: 


Maintenance, Depreciation, and Retirements of Equipment and Way 
and Structures: This item is the total of the accounts which, in the 
statements published by the Interstate Commerce Commission, are summarized 
as Maintenance of Equipment and Maintenance of Way and Structures, Amor¬ 
tization of defense projects is included in both 1941 and 1942 as a part 
of the depreciation accounts. 

Freight Ton Miles, Revenue Passenger Miles, and other measures 
of operations are used in the same sense as in Statistics of Railways in 
the United States , Bureau of Statistics, Interstate Commerce Commission. 


Tables submitted Call except Table V relate to Class I Railways only ) 

I. MAINTENANCE, DEPRECIATION, AND RETIREMENTS OF EQUIPMENT, 

AND WAY AND STRUCTURES, 1929-1942 — This table presents in total and 
in detail the amounts expended and allowed for maintenance, depreciation, 
and retirements from 1929 through October 1942* It shows important in¬ 
creases in the total in recent periods. 

II. MAINTENANCE, DEPRECIATION, AND RETIREMENTS OF EQUIPMENT 
AND WAY AND STRUCTURES, AND SELECTED OPERATING DATA, 1929-1942 — This 
table compares amounts expended and allowed for maintenance and depre¬ 
ciation with the need for such expenditures and allowances, as evidenced 
by the total volume of railway operations. The amounts expended and 
allowed have apparently tended to keep pace with the increased volume 

of railway operations. 

#' 

, III. MAINTENANCE, DEPRECIATION, AND RETIREMENTS OF EQUIPMENT 
AND WAY AND STRUCTURES, AND SELECTED OPERATING DATA, 1929-1942 — This 
table compares the amounts expended and allowed for maintenance and 
depreciation with the need for such expenditures and allowances, as 
evidenced in this instance by the intensity with which railway properties 
have been employed. It indicates that the increase in the intensity of 
utilization has been somewhat greater than the increase in the amounts 
expended and allowed. 

IV. MAINTENANCE, DEPRECIATION, AND RETIREMENTS OF EQUIPMENT 
AND WAY AND STRUCTURES, AND SELECTED MAINTENANCE DATA, 1929-1941 — 

This table compares the amounts expended and allowed for maintenance 
and depreciation with the maintenance activities performed. The changes 
in maintenance activity have apparently tended to parallel the changes 
in amounts expended and allowed. 

V. SERVICEABLE CARS AND LOCOMOTIVES, 1931-1942 — This table 
indicates the effectiveness of maintenance performed, as evidenced by 
the numbers and percentages of freight cars, passenger cars, and 
locomotives in serviceable condition. It shows that serviceable cars and 
locomotives have increased in recent periods, in both number and percentage 
of total. 


1-2592-HOBU-PU-WP 












- 2 - 


VI. INDEXES OF SELECTED FINANCIAL AND OPERATING DATA, 1929- 
1942 — This table summarized -the data in Tables I through IV, in terms 
of index numbers based on 1936-1939 averages. 

VII. MATERIALS AND SUPPLIES INVENTORIES, 1941-1942 — This 
table shows the value of materials and supplies on hand at the end of each 
of the first ten months of 1941 and 1942, and indicates that inventories 
of materials and supplies were substantially larger in 1942 than in 1941* 

VIII. MAINTENANCE, DEPRECIATION, AND RETIREMENTS OF EQUIPMENT 
AND WAY AND STRUCTURES, AND AMORTIZATION OF DEFENSE PROJECTS, 1941-1942 — 
This table reflects the amounts charged to amortization of defense 
projects and compares this item with other maintenance, depreciation, and 
retirement accounts. While amortization of defense projects is still 
relatively small, its importance is increasing. 


A 


S. 




1—2692—NOBU.PU-WP 




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1-3593-IOBC-PO-WP 


1929-1941, Inclusive, Statletter of Railways In the United States , Bureau of Statistics, Interstate Conmsrcs Commission. 
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Sources: 1929-1941, inclusive, Statistics of Railways In the United States , Bureau of Statistics, Interstate Commerce Commission. 

Interim data, 1941-1942, Monthly Statements , Bureau of Transport Economics and Statistics, Interstate Commerce Commission. 























O.P.A. Exhibit IV 
Pape 6 of 10 


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Sources: 1931-1941, inclusive, Statistics of Railways In the United States , Bureau of Statistics, Interstate Commerce 
Commission. 

Interim data 1941-1942, Monthly Statements , Bureau of Transport Economics and Statistics, Interstate 
Camzaarce Commission. 
























(F SHJECTED FINANCIAL AND OFERATI’C DATA, 1929-1942 


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O.P.A. Exhibit IV 
Page 9 of 10 


TAB IE VII 

o 

MATERIALS AND SUPPLIES B.TStJTCRIES, 1941-1942 
ALL CLASS I RAILWAYS 


(dollars in millions) 



1941 

1942 

Percentage 

Increase 

J ami ary 

4 343 

$ 481 

40% 

February 

357 

500 

40 

March 

371 

520 

40 

April 

369 

529 

43 

May 

373 

534 

43 

June 

379 

534 

41 

July 

3S7 

555 

38 

August 

396 

530 

34 

September 

412 

523 

27 

October 

425 

516 

21 


Source: Monthly Statement, No* 11-125 , Bureau of Transport 
Economics and Statistics, Interstate Coumerce 
Commission. 







1-2592- OBO-PU-WP 

































































































O.P.A. Exhibit IV 
Rage 10 of 10 


TABLE VIII 

MAINTENANCE, DEPRECATION, AND RETIREMENTS OF 
E^UIR£ENT AND WAY AND STRUCTURES, 

AND AMORTIZATION OF DEFENSE PROJECTS, 1941-1942 
ALL CLASS I RAILWAYS 


(In millions of dollars) 



Total 


Total Maintenance, 

Excluding 


Depreciation,and 

Amortization of 

Amortization of 

Retirements 

Defense Projects 

Defense Projects 


1941 

|1,596 

$1,583 

$13 1/ 

1942 

1,824 2/ 

1,748 2/ 

76 2/ 

January 

144 

140 

4 

February 

138 

134 

4 

March 

153 

148 

5 

April 

161 

155 

6 

May 

166 

159 

7 

June 

171 

164 

7 

July 

174 

167 

7 

August 

180 

172 

8 

September 

178 

170 

8 

October 

183 

174 

9 

November 

176 

165 

11 


1/ Amortization of defense projects began in June, 1941. 

2/ Total for 11 months through November. 

Source: Monthly Statement, No. M-100, Bureau of Transport Economics and 
Statistics, Interstate Commerce Commission* 


1 - 25 9 2-NOBTJ-PU.WP 


















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OPA Exhibit V 
Table 2 

P&ge 1 of 2 pages 


GROSS AND NET ADDITIONS AND BETTERMENTS AND DEBT REDUCTIONS WITHOUT 
RESORT TO OUTSIDE FINANCING - 24 SELECTED CLASS I RAILWAYS V 


Item 


1941 1942 

(Year) (10 mos.) 




Additions & betterments 

1 . Road 

2. Equipment 

Total (Items 1-2) 

3 . Redemption of equipment obligations, 

paymaits on conditional sales 
agreements, and down payments 
on new equipment. 

4 . Reduction of short term loans. 

5 . Reduction of long term debt, in¬ 

cluding operation of sinking 
funds, but excluding amounts 
inc-iuded in Item 3 above. 

6 . Total (Items 3-5) 

7. Gross Total (Items 1-5) 

Depreciation and Retirement 


$112,277,000 

64,787,000 


$132,751,000 a/ 

62,311,000 a/ 


177,064,000 195,062,000 a / 


105,841,000 

20,125,000 


129,495,000 a/ 

20,264,000 a/ 


160,001,000 

285,967,000 

463,031,000 


180 ,048,000 a/ 
329,807,000 a/ 
524,869,000 a/ 






8 . 

Depreciation - Road and Structures 

12,470,321 r/ 

s/ 

9. 

Depreciation - Equipment 

150,931,445 tJ 

£/ 

10 . 

Property Retired during year 

166,747,202 r/ 

n/ 

11 . 

Total 

330,146,968 

a/ 

12 . 

Net (Item 7 - ll) 

132 ,882,032 

n/ 

\ 

' Source: answer page 28 

r/ Source: Annual Reports 
24 roads. 



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OPA Exhibit V 
Table 2 

page 2 of 2 pages 


Item 


1941 1942 

(Xear) ( 10 mos.) 


13. Total Additions and betterments (Road 

and Equipment) and Redemption of 
■kquipmait obligations, payments on 
conditional sales agreements and down 
payments on new Equipment (Total 
Items 1, 2 and 3) 

14. Portion of Item ±3 necessitated by 

the war. 


$282,905,000 $324,557,000 

50,687,000 97,207,000 2 / 


15 . Total additions, betterments, Re¬ 
demption of Equipment obligations 

etc. not necessitated by the war. 242,218,000 227,350,000 


16. Percentage of Total additions etc* 
(Item 13) necessitated by the 

war. 


17.9% 30.0% 


17. Total -additions & betterments and 

Redemption of Equipment obligations, 
payments on conditional sales 
agreements and down payments on 

new equipment. $282,905,000 $324,557,000 


18. amortization of defense Projects 
Charged to Operating Expenses. 


8,343,000 51,551,000 


19. Percentage of Additions & betterments 
etc. (Item 18) Represented by 
amortization Charged on defense 

Projects (60 month basis) 3«0% 15*9% 


2 / Source: association of American 
Railroads. 


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O.P.A. EXHIBIT V 


Table 3 

Par Amount of Equipment Trust Certificates 
Offered by Class I Railways, 1941, 1942 


1 

2 

3 

4 

5 

6 

7 

8 


9 

10 
11 



-Ui ... . . 

(2) 

Year 

cf Issue and 

Par Amount 

Date 

of Maturity 

of Certificates 


Issued in 1941 and 


Maturing in: 


1945 

1 4,360,000 

1946 

10,625,000 

1947 

18,465,000 

1948 

6,131,000 

1951 

120,455,000 

1952 

9,280,000 

1956 

82,335,000 

Total 

261,651,000 


Issued in 1942 and 
Maturing in: 

1947 

1952 

Total 


2,830,000 

25,160,000 

27,990,000 


Source 


Securities and Exchange Commission. 












Table 4 

Age Distribution of Revenue Frei^it Carrying Cars and 

Passenger Train Cars 




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Source: American Railway Car Institute, Statistics, Car Building and Car Repairing 1941 
















OPA"Exhibit XI 
Page 1 of 4 pages. 


’’Rail Performance in 1942" 


(Article by J. J. Pelley, President, Association of American 
Railroads Appearing in Traffic World for January 2, 1943) 


Railroads of the United States successfully handled 
in 1942 the greatest volume of freight traffic any form of 
transportation in the world has ever been called upon to move 
in any corresponding period. Their performance has been one 
of the outstanding features in connection with prosecution of 
the war. 

Despite the unprecedented volume, railroads trans¬ 
ported it without congestion. Some temporary stringencies in 
certain types of equipment have occurred but there has been 
no interference with the war effort because of inability of 
shippers to obtain cars. 

The volume handled by the railroads amounted to 
630,000,009,000 ton-miles. This was 135,000,000,000 ton-miles, 
or nearly 33 per cent greater than that handled in 1941, the 
previous record year. It was more than one and one-half times 
the volume moved in the first Tforld War year 1913. 

This heavy increase in ton-miles resulted from the 
heavier loading of freight cars and longer haul per ton, car- 
loadings in 1942 having been little more than one per cent 
greater than in the preceding year. Freight loadings approxi¬ 
mated 42,300,000 cars in the current year, an increase of 
510,000 cars above 1941. 

At the same time, railroads established a new high 
record in volume of passenger traffic in 1942. Passenger-miles 
(the number of passengers multiplied by the distance carried) 
totalled 53,000,000,000. This exceeded by more than 6,000, 
000,000 passenger-miles, or 13 per cent, the previous record 
established in 1920. It also exceeded 1941 by more than 23, 
000,000,000 passenger-miles, or 30 per cent. 

Part of this heavy passenger traffic in 1942 can 
be attributed to troop movements, approximately 2,000,000 
members of our armed forces now being transported monthly in 
organised movements. 

Railroads this year have been faced with the most 
rapid increase in passenger traffic in their history. In 
the first three months, that traffic was only forty per cent 
above the same period in 1941.• The second quarter saw an 
increase to 67 per cent, and in the third quarter, the in¬ 
crease was 90 per cent. For the fourth quarter, an increase 
of 116 per cent is estimated. Railroads now are moving twice 
as great a volume of passenger traffic as they did at this 
time last year but with the same amount of equipment, as 
they have been unable to acquire more. Eecause of that sit¬ 
uation, passengers have suffered some inconveniences. The 
railroads, though, appreciate the sympathetic cooperation 
of the traveling public in helping to meet the tremendous 
passenger traffic problem which the carriers face. 












OPA Exhibit XI 
Page 2 of 4 pages. 


Less a Ton-Mile 

Not only are railroads today furnishing the 
country with the greatest freight service in history, hut 
they are receiving less for hauling a ton of freight one 
mile than at any time since 1913. Tie average revenue per 
ton-mile is now only 0.927 cent. 

Railroads have been able to meet transportation 
demands in 1942 because of improvements in equipment con¬ 
struction and a continuous improvement in operating efficiency. 
This has enabled them to get the utmost utilization not only 
out of their freight and passenger equipment, but also their 
tracks and other facilities, in order to assure an uninterrupted 
performance of the enormously increased service that is being 
demanded of them. Every efficiency factor in 1942 has shown 
an improvement compared with the preceding year, except that 
of train speeds. The average speed of both freight and passenger 
trains in the current year was slightly less than in 1941 but 
this has been more than compensated for by the increase in the 
amount of freight and number of passengers carried per train. 

Efficiency Records 

Among the outstanding efficiency records established 
by the railroads in 1942 were the following: 

1. Average load of freight per train was 1,030 tons, 
the highest on record. In 1941, it was 915 tons. 

2. Performance per freight train has more than doubled, 
gross ton-miles per freight train hour having increased from 
16,555 in 1921 to 35,374 in 1942, while net ton-miles per 
freight train hour increased from 7,506 in 1921 to 16,216 

in 1942. 

3. For each pound of fuel used in freight service in 
1942, railroads hauled 9.2 tons of freight and equipment one 
mile compared with 6.2 tons in 1921. 

4. The average load per freight car was 3lJ tons in 
1942, the highest on record. 

5. The average haul of freight shipments in 1942 broke 
all records, increasing by approximately fifty miles compared 
with the preceding year. 

6. Average daily movement of freight cars was 49 miles 
in 1942, a new high record, and an increase of 90 per cent 
compared with 21 years ago* 

7. Average passengers per car and per train broke all 
previous records by a wide margin, the load per car being 
more than 40 per cent and the load per train being more than 
60 per cent greater than in 1941. 

3. Average capacity of freight cars was 50i' tons in 
1942, the highest on record. 

9. Average daily movement of freight locomotives in 1942 
was 122.5 miles, or an increase of 57 per cent compared with 1921. 

10. Tractive power of locomotives averaged 52,000 'pounds, 
an increase of 40 per cent compared with twenty years ago. 




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OPA Exhibit VI ~ 
Page 3 of 4 pages. 


Never before have denands on the railroads been 
so great as in the past gear. And never before has rail 
transportation placed as important a part in the prosecution 
01 a war as now. Immediately after Pearl Harbor, the rail¬ 
roads almost over night were called upon to move thousands 
oi our armed forces from one coast to the other. These,com¬ 
plete with all equipment so as to be available r cr immediate 
Held duty, were handled in scores of special trains. As the 
war program expanded, thousands of cars of materials of all 
kinds had to be transporter] to all parts of the country for 
the construction of defense planets. Later, as cars of raw 
materials were moved into those plants, others loaded with 
manufactured war materials were moved away from them and dis¬ 
tributed throughout the country. With the increase in the 
number of armed forces, Lend-lease shipments and war pro¬ 
duction as well as the freight traffic, which the cessation 
of intercoastal waterway operation caused to be diverted to 
the rails, the denands upon the railroads have continuted 
to grow. 


Export Freight 

Because of war activities in the Pacific, the 
volume of export freight moving to Pacific ports now app¬ 
roximates 30 per cent of the total handled through all 
ports compared with seven per cent in 1941. This has in¬ 
creased considerably the average length of haul. At the 
same tine export freight traffic is moving into North Atlantic 
ports in a steady stream in contrast to the situation that 
prevailed on the Eastern seaboard in 1918, 

Despite the increased load placed on them, the rail¬ 
roads in the current year have continued successfully to meet 
not only the transportation demands growing out of the war but 
those required to meet civilian needs. 

Railroads in the first eleven months of 1942 installed 
in service 60,739 new freight cars and 668 new locomotives. De¬ 
mand for materials needed far other war purposes, especially 
steel, has resulted in a reduction in the amount cf materials 
allocated by the government for new railroad equipment. Oth er- 
vd.se, the number of new cars and locomotives put in service 
this year would have been greater. The supply of certain types 
cf equipment, such as flat, gondola and hopper cars, has been 
at times barely adequate to take care of traffic demands. 
Additional equipment will be needed to enable the railroads to 
continue to meet transportation demands. Expectations are that 
greater war activity may result in an increase of about ten per 
cent in ton-miles in 1943 compared with 1942. The War Pro¬ 
duction Board has announced a program for part of the coming 
year which will enable the railroads to purchase 20,000 new 
freight cars and 336 new locomotives, including both steam 
and Diesels. 


Taxes 

Railroad taxes in the year ended with October 31, 
1942 , were by far the highest on record, amounting to the 









$PA Exhibit IXI - 
Page 4 of 4 pages. 

unprecedented sum of $1,077,000,000, or a daily average ©f 
nearly $3*000,000. In the calendar year 1941, their tax 
bill was $547,000,000. In order to meet their taxes alone* 
railway revenue derived from 56 days of operation were re¬ 
quired in 1942, compared with 37 days in 1941. 

Expenditures for fuel, supplies and materials used 
in current operation by the Class I railroads amounted to 
approximately $1,400,000,000 in the calendar year 1942, com¬ 
pared with $1,161,000,000 in 1941. 

Capital expenditures in 1942 for equipment, roadway 
and structures and other improvements to property are estimated 
at $ 600 , 000 , 000 , compared with $543*000,000 in the preceding 
year. 

Increased traffic as well as larger expenditures for 
maintenance work resulted in a further increase in employment 
on the railroads in 1942, the average number of employes having 
been 1,270,000, or an increase of 11.4 per cent compared with 
the preceding year. Annual earnings per employe in 1942 aver¬ 
aged $2,285, compared with $2,045 in 1941. 

Ability of the railroads to handle the record traffic 
this year has been made possible by the wholehearted - cooperation 
of the shippers of the country; the sympathetic, and harmonious 
attitude of the Army and Navy; and the wise advice and directions 
of the Office of Defense Transportation. Through various or¬ 
ganizations, shippers have concentrated on the prompt loading 
and unloading of freight cars and other means of improving the 
efficiency with which freight cars are being utilized by shippers 
and receivers of freight. The railroads appreciate the cooperation 
which they have received from private and public sources. 












* 




O.P.A. Exhibit VI-A - 1 


STATEMENT OF RAILROAD 
REPRESENTATIVE RESPECTING ABANDONMENTS 

Portion of statement of Mr. R. V. F letcher, Vice President, 
Association of American Railroads before Committee on Finance, United 
States Senate - August 5, 1942, in hearings on K. R. 7376, Revenue Act 

1§42, relating to abandonments. 

"Mr. Fletcher.... 


Mr. Chairman, I do think the change in the law about long-term 
capital losses is going to work a very great hardship. 


You know, at the present time, under the act as it passed the 
House, long-term capital losses—and my understanding is it means cap¬ 
ital obligations running over a period greater than 15 months—cannot 
be deducted, except they may be deducted as a credit against capital gains. 
In other words, before you can get any deduction for capital losses you 
have to have capital gains in an equal amount or a greater amount. 

Here is the trouble, and it is peculiar of the railroad industry; 
We are now in a program of abandoning, branch lines — 


The CHAIRMAN. How is that? 

Mr. FLETCHER. I say, we are engaged in a program of abandoning branch 
lines. 


The CHAIRMAN. Yes, sir. 

Mr. FLETCHER. We are urged by the War Production Board to expedite that 
program. 

Some cases have happened where the steel which constitutes the 
rails on these branch lines has actually been seized by the Government 
without waiting for an abandonment order to be issued by the Interstate 
Commerce Commission. I do not mean they have seized any lines of very 
great importance. 


Here is a constant urge by the War Production Board to let them 
have the steel which composes the roadbed, the rails in these branch 
lines which they need for the manufacture of the steel so essential to the 
war effort. If they are not allowed to write off the losses which occur 
by the abandonment of these branch lines, it is going to make a very great 
hardship upon certain railroads." (Pages 850-51, Revenue Act of 1942, 
Hearings before the Committee on Finance, United States Senate, Seventy- 
seventh Congress, Second Session, on H.R. 7378, an Act to provide revenue 
and for other purposes. Volume i) 


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O.P.A. Exhibit VI - 2 


From: 


CHART 1. 



Abandonments in the United States Reached the Record 
Figure c_ 2,516 Miles in 1942. Those in Canada Aggregated 

23 Miles 


s 


Railway Ape 

Annual and Statistical OutlooV 
January 2, 19A3 - Pape 108 


Number 


1-2611 nobu-pun-wp 


























































































































OPA Exhibit VI-B 
24 pages Cover Page 


TESTIMONY OF L. R* CAPRON BEFORE 
DIVISION T O IN DOCKET NUMBER 
28300 and"23310 CLASS RATE INVEST 

TIGATION, 1939, CONSOLIDATED 
FREIGHT CLASSIFICATION,AT INDIANAPOLIS, 
INDIANA SEPTEMBER 25, 1942. 


Numbers in Parenthesis refer to 
the page numberes in the record 




















OPA Exhibit VI-B 
Page 1 of 24 pages 

(878)Q (By Mr. Hughes) Mr. Capron, vdll you please give 3^-our 
full name and address to the reporter. 

A I. R. Capronj Chicago, Illinois 

Q Whqt is your official position with the Burlington Rail¬ 
road? 

A Vice president, in charge of traffic, of the Burlington 
System Lines. 

V 

Q Will you state briefly your railroad experience? 

Chairman Aitchison: Will not his qualifications be 
conceded? 

Mr. Bee: Yes, they will be, Mr. Chairman, as far as 
we are concerned. 

Mr, Norman: Yes, as far as we are concerned. 

Mr. Hughes: Very well. 

Q (By Mr. Hughes) Mr. Capron, what noticeable effect 
has the war had upon railroad tonnage in Western Territory? 

A Well, the most noticeable effect has been a'very sub¬ 
stantial increase in tonnage. However, that began long 
before our entrv into the war. It began with the immi- 

t/ ^ * 

nence of an outbreak of hostilities in Europe, and it 
was further accentuated when war actually broke out in 
Europe, when we started our own defense program, and when 
that program kept on expanding until the peak, which came 
after Pearl Harbor, when we actually got into the war. 

(879) I think that the best illustration of that will be found 
in the net ton-miles, which in the 'Jestern District, for 
the year 1938, were 110,709,957,154. In 1939, that went 







. 




















OPA Exhibit VI-B 
Page 2 of 24 pages. 


(879) up to 121,869,978,049. In 1940, it rose still further to 
134,594,908,000. In 1941 it went up still further, to 
177,478,247,000. In the first five months of the present 
year, 1942, the figure was 88,073,262,000, which compares 
with 61,128,426,000, in the first five months of 1941. I 
do not know of any conditions, or prospects, that existed 
prior to the outbreak of the war in Europe, that would 
have given ground for any feeling on our part that we were 
in for any substantial increase in traffic. Me were hope¬ 
ful for an improvement, but no one expected anything other 
than a moderate improvement, a normal fluctuation. We did 
not even know that there would be an improvement; things 
might have gotten worse. In other words, it seems to me 
that it is correct to say that practically this entire 
increase is due to the war. 

Q T/hat would vou say are the major differences in the 
nature of the traffic movement today, and those prevailing 
prior to 1939? 

A One major difference is the drying up of important items 
or ordinary commercial traffic, items that constitute a 
very substantial portion of the revenue of the railroad, 
such as automobiles — passenger automobiles; all manner 
(830) of electrical appliances; household equipment, and miscel¬ 
laneous gadgets of that kind. Anything, any articles manu¬ 
factured from iron or steel, or other so-called critical 
materials, have been drying up, and their place has been 
taken by war materials of various kind, largely a new class 































■'■'Sr y-y; 

























OPA Exhibit VI-B 
Page 3 of 24 pages. 

(830)of traffic, moving in substantial volume on land-grant 

rates. There has been, furthermore, a different distri¬ 
bution of the business. In other words, the new business 
is not going where the old business went. In other words, 
these war plants have been spread all around the territory, 
and particularly since Pearl Harbor, and they have been 
located, quite apparently, for strategic considerations, 
or reasons, rather than ordinary economic or commercial 
reasons, and so that has brought about a different dis¬ 
tribution situation. Then of course there is the substan¬ 
tial increase in tonnage that has come because of taking 
the ships out of service. We have this heavy intercoastal 
business to handle, that formerly moved by water; and there 
is also intraccastal business, or west cost traffic, that 
was formerly moved by water, that the railroads are handling 
at the present time. Then there is the movement of oil by 
rail, from the Texas fields, and from Wisconsin, to the North 
Atlantic Seabord, which is in part a substitute for oil it 
formerly moved from Texas by water, and also in part a sub¬ 
stitute for oil that moved from South Milwaukee to the North 
(881) Atlantic refineries by vrater. Now, those are just a few of 
the major items that have changed, and I think I could go 
on for quite a while, about the manner in which our traffic 
has been changed, not only in character, but in volume as 
well. 

Q Then you do not know at this time when the railroads may 
have to gc on a diet, to overcome that adipose tissue, do you? 



I 











0?A Exhibit VI-B 
Pare 4 of 24 pages 

V col)A No, sir, I do not, but it seems inevitable that 're are 

going to have our "morning after." 

Q Do you have any basis upon -which to form a judgment con¬ 
cerning the character or volume of tonnage to be carried by 
the 7;estern Railroads at the conclusion of the war? 

A No, sir, _ really have no basis upon which to form any 
judgment at this time. Cf course we know that the war 
industries will slow down, and undoubtedly a lot of them 
■will go out of existence. At the same time, with respect 

to others, we have been told that they may be continued 

• 

permanently as part of a new program of national defense, 
or national preparedness; and as to others, it is stated 
that it is expected that they wall be converted over into 
commercial use. That is what others say. Now when I say, 
that is what others sav, "/hat I mean bv that is this, that 
the representatives of some of the present concerns oper¬ 
ating plants for the Government, have told us that thej 1 - 
(382)hope to lease those plants from the Government after the 
war, and go into commercial business in those plants. But 
that is all speculation, of course, just at the present 
moment; we do not know what the condition is going to be 
after the war, or what activities will be permitted. Our 
traffic in the West has been very materially affected in 
ore war tines by Government planning, he do not know what 
government planning may be considered necessary in the 
postwar period. It may all depend upon who is doing it at 


that particular time. 




















OPA Exhibit VI-B 
Page 5 of 24 pages 

(882) ft (By Chairman Aitchison) There is one factor of change 
which you have not mentioned, Mr. Capron, that is somewhat 
important, is it not, and that is the way that you have 
been, by your own acts and by the acts of others, getting 
rid of a lot of your unprofitable branch line operations? 

A It is a fact, Mr. Chairman, that we have gotten rid of 
some of our unprofitable branch line operations, yes, sir, 
and we have been very hopeful of being able to get rid of 
a lot of others; but to date the majority of our cases are 
still pending. 

Q Well, that does not make any difference, in the case of 
a lot of the lines that are being taken up, does it? 
k Sir? 

Q I say, that does not make any difference, with a lot 
of lines that are being taken up, does it? 

(883) A I am very sorry, Mr. Chairman, but I do not just follow 
you in that question. 

Q If the Metals Reserve Corporation wants a line, it takes 
it, does it not? 

A Oh, yes. 

Q Whether the case is pending before the Commission, or not? 

A Oh, that is true, yes, Mr. Chairman, but we have not been 
requisitioned as yet. 

Q Well you are speaking now, I suppose, only of the exper¬ 
ience of the Western Carriers generally, are you not? 

A Well, right at the present moment, Mr. Chairman, I am 
speaking of — — when I said that we hcive not been i equisi - 
tioned as yet, I was speaking ^or the Burlington Railroad. 














OPA Exhibit VI-B 
Page 6 of 24 pages* 

(BB3)Q Yes, but other lines have been, to your knowledge, have 
they not? 

A Yes. 

Q And have you been cooperating with the Metals Reserve 
Corporation in that regard? 

A I am not able to answer that question, Mr. Chairman, 
because I do not know what, if any, negotiations of dis¬ 
cussions we may have with the Metals Reserve Corporation. 

Mr. J. R. Bell: If you will pardon the interruption, 

Mr. Chairman, it is the Army and Navy Departments, and the 
VJPB. 

Chairman Aitchison: No, but they take it over as the 
(884)Metals Reserve Corporation, do they not? 

Mr. Bell: I think not, Mr. Chairman. They requisi¬ 
tioned our Promontory branch, and the Army entered into a 
contract to take it up. I do not know just what the book¬ 
keeping is. 

Chairman Aitchison: Well, there may be some doubt 
about it, but the WPB has a subsidiary corporation which 
is known as the Metals Reserve Corporation. 

Mr. Bell: There is a Metals Reserve Corporation, yes, 
sir, but our requisition was by the Army and Navy, upon 
order of the WPB. I do net |?now just how the Metal Re¬ 
serve Corporation enters into it, but they do not do the 
requisitioning. 

Chairman Aitchison: Possibly it is upon their recom¬ 
mendation. 

Q (By Chairman Aitchison) But the thing I am trying to 




X. 






OPA Exhibit VI-B 
Page 7 of 24 pages. 

(884) get at, Mr* Capron, is as to whether or not this has been 
going on with the active cooperation of the major lines 
in the West, and what the effect is going to be when we 
enter the postwar period, 

A On that subject, Mr, Chairman, I can speak for the 

% 

Burlington System Lines only, as to what has been done, and 
as to that, I will say that we have had abandonment projects 
under consideration for several years, some of which have 
been presented,- and others of which have not been presented; 

(885) but we have simply watched the trend of the traffic, to see 
-whether or not it is going to pick up, with a view to filing 
abandonment proceedings if it did not pick up; but under 
these emergency conditions, valth the need for rail, undoubt¬ 
edly we are going to present, and we are at this time pre¬ 
senting, cases for abandonment, with the hope that the need 
for the rail may have some influence in the decision upon 
the applications; but of course we are not proposing to 
abondon any lines that are not a drag on us, that do not 
represent a loss. In other words, in the language of some¬ 
one that adequately expresses the situation, we are treating 
only of the lines that have already have been abandoned by 
the communities that they serve. 

Q Vfell are you going to the Army and the Navy, or the WPB, 
or the Metals Reserve Corporation, or whoever it is that 
does the requisitioning, or that can be induced to requi¬ 
sition, and making suggestions with respect to lines that 
can be taken up, as part of our plant now in operation? 

A I have no knowledge, Mr. Chairman, as to whether anyone 









* 4 




-fr“t ' 


' 




OPA Exhibit VI-3 
Page 8 of 24 pages. 


(335)in our Operating Department has .done anything of that kind 
I know, however, that the Traffic Department has not. 

Q Has, or has not? 


A Has not. 


Q Well, the effect of all of this, if you do get abandon¬ 
ments cf that sort, is that you are going to have a more 
(886) efficient machine, as far as its relation to traffic is 


concerned, is it not? 

' \ % 

A To the extent, hr. Chairman, that we are permitted to 
abandon lines that we are at the present time operating at 
a loss, there will be that improvement, yes, sir. 

Chairman Aitchison: Continue. 

Q (3y Mr. Hughes) Mr. Capron are the freight rates to, 
from, and in Western Territory today, substantially what 
they were in 1939, except for the Ex Farte 148 increases 
of this year? 

A That is true of the rate structure as such, yes, sir. 

Of course there are continually in progress certain adjust¬ 
ments, always downward, to meet competitive conditions, and 
some of then came along after 1939; but speaking of the rate 
structure in general; as' a whole, there has been no change, 
no general change, other than that which was involved in 
Ex Parte 148. 

Q Would it be the purpose of your railroad, and other 
7/estern Railroads, to continue to make current adjustments 
in freight rates to meet situations as they develop? 

A Yes, sir, that is correct. We could not possibly do 
business otherwise, because you cannot have a static rate 


adjustment. 







V. 


0?A Exhibit VI-B 
Page 9 of 24 pages. 

(8o6)Q Suppose, Ur. Capron, as Chief Traffic Officer of your 
railroad, you were called upon at the present time to fix 

(S87)a rate on a vdde group of articles between Omaha, Nebraska, 
and Cleveland, Ohio, or between Chicago, Illinois, and 
Denver, Colorado, to become effective in 1944. How would 
you go about doing that intelligently, and what facts would 
you use as your base? 

A It could not be done intelligently. In the first place, 
we do not know what our costs will be in 1944. They are 
already talking about further wage increases. Furthermore, 
we do not know what will be the general volume of traffic 
that we will be handling in 1944, or the character of the 
traffic. Then furthermore, there is the other feature that 
I mentioned a moment age, with respect to the possibility 
or further Government planning that might be considered 
necessary in the postwar period, under postvra.r conditions, 

— and we are hopeful that 1944 will be a postwar year. 

For all of those reasons, you just could not intelligently 
figure at this time any rate or any setup of rates that 
would be proper in 1944. There are so many possibilities, 
that you cannot possible sit down and say, ,r .7ell now, this 
will be about right." You can sit down of course and say, 

"If so-and-so happens, why, then, this should be about 
right," and you could make about seven different guesses, 
and work out seven different rate structures, and maybe 
not one of those seven different rate structures would 


prove out to be proper 












OPA Exhibit VI-B 
Page 10 of 24 pages. 

(888)Chairman Aitchison: Mr. Commissioner Spiawn wishes 
to question the witness. 

Com. Spiawn: I do not know, Mr. Hughes, whether I 

/ 

correctly understood the purpose of your questions, or 
whether the witness was saying that it is impossible to 
forecast any changes in rates, or that the Traffic Depart¬ 
ments of the railroads are just abandoning the considera¬ 
tion of a rate structure during the war. In 1944, obvi¬ 
ously, rates will be charged, and the Traffic Departments 
of the rails, I take it, will function normally, at that 
tine with respect to the rates to be charged for rail ser¬ 
vice. This is my question, now, Mr. Capron: Do not these 
disturbed conditions call for more careful analysis and 

i 

consideration of rates and charges, than before these ex¬ 
traordinary conditions broke upon us? 

The Witness: Have you finished your question, Mr. 
Commissioner? 

Com. Splawn: I am directing that question to you as 
the Chief Traffic Officer of your railroad. 

The Witness: Yes, I understood that, sir, but I was 
just wondering whether or not you have finished your ques¬ 
tion. 

Com. Splawn; Yes. 

The Witness: I will try to answer it, and give you my 
opinion in the matter, at least, which is this, that as 
(889) far as our general rate structure is concerned, it would 
seem to me to be inadvisable, under these present condi¬ 
tions, to attempt to make any general revision of it, or 


I 









\ 
















/ . 







OPA Exhibit VI-B 
Page 11 to 24 

(339)create any general distrubance in it. However, as I say, 
the Traffic Department of the rail carriers will continue 
to function, and they are functioning; they are all very 
busy these days, handling the many problems that are con¬ 
fronting them, and many of those are rate problems, that 
grow directly out of the war effort. Any of these things 
that are necessary to the furtherance of our conduct of the 
war, or directly connected with it in any way, Toll be 
handled, of course. Now they may require some changes, 
but as I stated at the outset, it would seen to me that 
the lea.st possible general disturbance or upsetting of 
business relations, is extremely desirable. In other words, 
we are having enough things upset today by national condi¬ 
tions with which we are confronted, without going out of 
our way just voluntarily to disturb our rate adjustments. 

Now further in that connection, let me just add, I do not 
mean of course that we should not handle, and handle prompt¬ 
ly any readjustments that are necessary or of importance, 
in connection with the war effort. 

Com. Splay/n: Is not the effect of these extraordinary 
conditions, in the light particularly of your realistic 
summary, somewhat this, that in addition to the normal work 
(390)— such- as forecasting the commercial and traffic situation, 
and other normal questions, you have confronting you all of 
these disturbing problems that are incident to the v/ar effort, 
which make the normal process of forecasting necessary adjust¬ 
ments, just that much more difficult, and does it not neces¬ 
sarily follow, therefore, that more effort, thougt and 



















OPA Exhibit VT-B 
Psge 12 of 24 pages. 


(890)consideration should be given, and must necessarily be 

given, to the working out of rate patterns and adjustments 
for the future, than would be necessary if we did not have 
these extraordinary and unusual conditions? 

The Witness: Oh, undoubtedly. 

Com. Spiawn: The Commission in this proceeding has 
called upon the respondents to give thought to, and plan 
for, the normal movement of commerce, and therefore, ap¬ 
proaching the problem in that way, does it necessarily 
follow that you are being interfered with by the Commission? 
In other words, can we not, and should we not, approach 
the problem in this way, that what the Commission has done 
was started when there was no thought of this war? Now 


that the war lias come upon us, it makes the problem that 
much more difficult, of course, and even more important, 
and therefore, is it not in order that we should have all 
of the cooperation between the Government, industry and 
the railroads, that can possibly be brought about? 

(891) The Y/itness: That is always desirable, of course. 

Com. Spiawn: Particularly in view of these prophecies 
that are being made, ranging from the most pessimistic, 
that we will be in bankruptcy a few months, perhaps, after 
■ the war is over, to the other extreme, that with the great 
increase in production that will be necessary to supply a 
needy world, we will be rolling in wealth, — and the truth, 
of course, is nrobably somewhere inbetween, although now no 
one can say just what it wall be. 

The Witness: Yes. 















(89l)Com. S pi awn: Now can we not, in this proceeding, with 
the benefit of your own vast experience in traffic matters, 
and that of your associates on other railroads, and in in¬ 
dustry, carefully work toward a stable and reasonable adjust- 
ment, such as the future conditions which we may have con¬ 
fronting us, may demand, in spite of the fact that we must 
do some considerable guessing as to conditions following the 
war? In other words, what I have in mind is this: I think 
I discern some tendency to consider that we are approaching 
this problem as litigation, when, the very conditions which 
you have so clearly recited in your testimony appear as a 
challenge for cooperation — to work in more of a spirit of 

i 

compromise, such as perhaps we have never before been able 
to abhieve in this country. We are in the United States 
of America, and our traffic must move, from Canada to Mexico, 
(892)and from the Pacific to the Atlantic; and we realize th&t 

nobody wants it to move more freely, or under any more reason 
able and just rates, than do you and your associates. I 
think that is true of all of the counsel and traffic men, 
and everyone here, that fundamentally, everyone would like 
to see something constructive achieved, out of this pro¬ 
ceeding. Many, however, are apparently beset by fears and 
misgivings that we may fall into some error which will do 
more harm than good. Now we can avoid the pitfalls if we 
all work together, so if we can approach this matter in a 
spirit of cooperation and compromise, I think we can more 
clearly analyze the situation correctly, each putting every¬ 
thing before the other, and recognising the fact that we 










.1 




OFA Exhibit VI-B 
Pave 14 cf 24 page 


(892)’'Till have problems in peace as -.veil as in war that may 

enable us to do something ■worth while here. 1 have said 
what I have said because I had it on my mind, and I shall 
comment on the situation no further. These matters have 
been running through my own mind, and they are the back¬ 
ground of any question that I vrould ask you. I would like 
to have your reaction to the situation as I have just out¬ 


lined it. 

The T.'itness: V.'ell, hr. Commissioner, I wish to assure 
you that there is no lack of desire on the part of the rail 
carriers, to cooperate. Naturally, as you say, of course, 
(393)^6 want to see a proper rate structure established, but 

necessarily, along with that, we have to give you our honest 
opinion. You referred at one stage of your remarks, to my 
own vast experience. Nell, 1 have had at least an extensive 
experience. I know that in 7/orld 'Tar To. 1, we were not 
able to predict the conditions that were going to prevail 
after the war. Tfe do know that we never went back to the 
conditions that existed prior to the war. Pate adjustments 
were made to meet changed conditons. It was necessary to 
make a let of increases in some cases, but there were some 
very substantial changes in conditions that no one could 
ere diet, and 1 believe there will be some very substantial 
changes and conditions that no one can predict now. It is 


ry honest conviction that we are going to see a great many 
changes in the postwar period, that we cannot possibly fore¬ 
see at the present time, tut whatever those changes may be, 

I am ver^ sure that we cannot expect to see a restoration cf 











OPA Exhibit 71-B 
Page 15 of 24 pages 



(893) prewar conditions; it just is not in the cards; and there- 

2 ore it seems to me to be utterly futile to attempt at this 
time to sit down and figure out a rate adjustment, and say, 
,f Now, this is v;hat is going to be proper after the "war is 
over. M 

0 y Chairman Aitchison) 7. : ell, these conditions have 
seen going cn i ^r seme time, have they not, — these con¬ 
ditions that you are speaking about? 

(894) A Do you mean, the war conditions? 

Q Yes. 

A Yes, sir. 

2 You have known about them "or seme time, have vou not? 

y t* 

A About the vrar? 

Q About these disturbed conditions that you have been 
portraying here. 

A Yes. 

Q 'Yell all that did not deter you iron asking the Commis¬ 
sion for a 10 per cent increase in your rates, involving 
a total change in your rate structure, just a few months 
ago, did it? 

A No, sir, not when the rages were increased; then vre 
asked for a general percentage increase, on that account; 
and they are talking now about another rage increase, in 
addition t* that. But that of course did not do any par¬ 
ticular violence to rate relations. That was just a ques¬ 
tion of the general level. 

Q As I understand it, then, your position is that the 
Interstate Commerce Commission, 


in this long series of 






OPA Exhibit VI-B 
Page 16 of 24 pages 

(894) cases which fixed the general basis of rates antedating 
the war — except the increases in Ex Parte 148 — was 
able to devise a set of class rates which so nicely fitted 
the disturbed conditions, both those that exist now, brought 
about by the war, and what you can foresee in the future, 

(895) that you suggest that no change be made in then; is that 
correct? 

A I think, Mr. Chairman, that the rates, which the Commis¬ 
sion fixed were very carefully considered, I do not think 
that any rate structure that was ever made, would be proper 
forever, because it has to be changed, to meet changes in 
conditions; but just at the present moment, conditions are 
changing.so rapidly, and the rate structure itself is of 
so little relative importance in these days, compared with 
many other considerations, that I do think that it would 
not be the course of wisdom to attempt to work out a new 
rate structure just at this time, based on — the Lord 
knows what! What might be proper now would not be proper 
next year, or the year after. We have had more or less 
experience in these things. Take in our Western Class Rates 
Case; we had a rate structure worked out there that I thought 
was a very good one, and a proper one, under the conditions 
that existed, and on the basis of the testimony that was 
presented, although the rates for the long hauls were too 
low; but that case went along for a period of years, and 
then by the time we got around to placing the rates in effect, 
they did not meet the practical exigencies of the moment. 

(896) In other words, the short-haul rates had been raised 
and long-haul rates had been reduced. The trucks were just 


| 

\ 

it : : 


































































y A A * 




























OPA Exhibit VT-B 
Page 17 of 24 pages. 


(396) coming into their own. The raises went in where there 
should have been reductions, and the reductions went in 
where they did not do any particular good. 

Mr. McCollester: Mr, Chairman, since the subject under 
discussion has been raised by Commissioner Splawn and by 
yourself, it may perhaps clarify the atmosphere, or at 
least let your Honors know the point of view of those whom 
I represent, if I may be permitted to make a very brief 
statement. In the first place, I may say that I would not 
do justice to my clients did I not say that I am frankly 
somewhat disturbed at the questions from the bench which 
appear to indicate that the rate structure now in existence 
is in need of a general revision. I know that there are 
those who are here who claim that it should be revised, 
but I can assure the bench that there are, from the stand¬ 
point of the communities, the states and the shippers, 
qeite as many who feel that the present rates structure 
under which business has been going on for a great many 
years, is entirely satisfactory — with some modifications 
here and there, of course, which canie dealt with indi¬ 
vidually — and that a great deal more harm than good t* 
the general national economy would be done by a change in 
the rate structure designed to shift industry from one 
(897)section of the country to the other. 

So far as this proceeding is concerned, your Honors of 
course know that the state of New York that I represent 
together with other nothern states has, with others, made 
renresentations to the Commission that this proceeding 

a. 












) .1 






A . 














r 


* 






9 












\ 











OPA Exhibit VI-B 
Page 18 of 24 pages. 


( 397 )should not go forward now, because your Honors, whatever 
may be the merits of the contentions of the complaining 
interests, cannot make a valid order when this proceeding 
is through. Now, I appreciate, and we all appreciate, as 
Commissioner Splawn has said, that business must go on. 

The making of rates during the war has got to go on. That 
is the function of the traffic managers of the railroads, 

f l do not conceive that the Commission sits as a traffic 

manager. It is the position of the state of New York that 
the Commission stands as a body to correct an unlawful 
situation; that you can make an order if you find the rates 
linlawful, and it is our view with all due respect that on 
a record which could be made here, you connot find that rates 
will be unlawful under entirely changed conditions. 

I think there is a great difference between cooperating 
in a voluntary revision of a rate structure, if that be needed, 
■which we deny, and proceedings looking to an order of the 

Commission which can be predicated only on a finding of unlaw- 

* 

(893)fulness in existing rates. It is the fact that, as I see it, 
such a finding cannot be made here which was our reason for 

' v 

urging that this proceeding should not go on. 

' 

Chairman Aitchson: I want to inoyiire of the witness 
finally: 

Q (By Chairman Aitchison) How long is it going to take 
you to make the necessary revisions and when d* you antici- 
pate commencing to make them to take care of these new in¬ 
dustries and things of that sort that have been dropped in 
here, there and yonder, as described by Mr, Brown? 





















\ 











OPA Exhibit VI-B 
Page 33 of 24 pages 


(898) A I am not familiar with the industries Mr. Brown has in 
the — 

Q You have some on your line. 

A The industries that have been established on our line 
we are taking care of currently. We always do that. In¬ 
dustries do not locate themselves as a rule without nego¬ 
tiating. That is not true, of course, of war industries 
that — 

Q When these plants are turned from war to peace, they 
are not going to be able to go on, on the present basis 
of rates, are they? They are just going to dry up. Take 
the $15,000,000 plant at Hastings, Nebraska. Is it going 
to be able to live on the existing set of rates? 

A I would say no, 

Q When are you going to begin to put in a set of rates 

(899) on which it can live? 

A When we know it is going to be doing business. We have 
no way of telling now whether that plant is going to be 
doing business after the war, nor do we knov. T where it will 
expect to do business, 

Q Nor can the lessees or proprietors of that plant know 
whether they can do business or where they can do business 
unless they know the rates they are going to have? 

A The rates will be the smallest part of their worry 
now, because they know if other conditions permit them to 
do business, or to continue any form of business at that 
plant, they can get the rates from the railroads that will 
enable them to do business if such rates can be given to 


them lawfully 


























» 

























OPA Exhibit VI-B 
Page 2Q of 24 pages 

(S99)Q Those rates cannot be established by you alone, but they 
have got to be made by you in connection with other car¬ 
riers, is that not correct? 

A That is right. 

Q When are you going to start making a study as to what 
is necessary in getting concurrences so as to be able to' 
take care of them after the war? Is there going to be a 
lag at that time when that plant has to be shut down be¬ 
cause of its freight rates? 

A No, sir. We cannot do it now. They are not interested. 

They do not know where they are at. They do not know what 
(900)conditions are going to be. 

Q The Government — 

A We cannot sit down now and formulate any program with 

l 

respect to that. 

Q The Government is paying the freight rate now and it « 
does not matter what it is as far as the plant is concerned? 

A Well, is that a statement? 

Q I am asking you that question. 

A If it is a question, I would say the Government cer¬ 
tainly knows what they are paying. They are after us every 
day to make adjustments. They are paying a lot of rates 
that are not in the tariffs. 

Q But you are not making rates for them on the basis of 
keeping that plant going as a competing plant fairly ad¬ 
justed with other competing plants, are you? 

A No, sir. We are making rates based on the representa¬ 
tions that are made to us by the Government officials as 




. 

































. 











p 1 1 • -BH 

r ■ 







* 






























38 




























. 




























, 

























* 

* 




' 





. 



















OPA Exhibit VI-B 
Page 21 of 24 pages. 

■» * 

(900) to what rates they want or think they should have. We do 
not always agree with them 100 per cent, but that is the 
basis for the consideration. We do not figure that they 
are competing. 

Q Be frank with me and tell me when it is that you are 
going to take up the necessary studies to enable you to 
fix up a proper post-war rate structure. 

A Just as soon as we are confronted with the problem and 

(901) know what the problem is going to be. 

Q You are confronted — 

A Mr. Chairman, we have all of these plants. Some of them 
may never operate and as to others, we do not know what 
production there will be. It may be one commodity and it 
may be a different commodity. We do not know what they 
may try to produce at a given point. 

Q YThat they try to produce may depend upon the rates that 
they can count upon, is that not the case? 

A Yes, sir. When they get around to figuring on whether 
they want to produce anything or not, they will cone to us 
and they will soon find out what they can count upon. 

Q Yes. 

A If we were to set up something now, we would be acting 
entirely in the dark, and the chances are 99 out of 100 
that when an industry got ready to d o business or wanted 
to take over one of these plants and go into some commer¬ 
cial business, they would come around to us and they would 
sav "Here is the situation: These rates will not do," and 
they will tell us why. 







0 ?A Exhibit VI-B 

__ Page 22 of 24 pages. 

(901) Q It is a hundred to one shot then that your judgment would 

be wrong, is that right? 

A Yes, sir. 

Chairman Aitchison: All right. 

Mr, McConnaughy: I would like to ask you one question, 

(902) Q (By T.-r, LcConnaughy) lour counsel stated that you could 
not anticipate 7;hat the conditions were going to be in 1944. 

Could you in 1930 anticipate what the conditions were going 
to be in 1933 with reference to economic conditions and the 
flow of traffic and the volume of traffic? Would you have 
been able to at that time ? 

A No. We certainly knew the trend at that time, but did 
not think it was going to go down as far as it did in 1932. 

Q Haven’t Tie been in such an economic change in this 
country since 1930 that there has been no time in the last 
ten years or twelve years that you could have anticipated 
three or four TT ears in advance what the economic conditions 
and the volume of traffic and flow of traffic would be? 

A That is correct, and always will be correct, 

Q Yes. 

A You cannot forecast three or four years ahead and do it 
intelligently. 

Q Then is that the sole, fundamental reason that you think 
nothing should be done at this time? 

A (No answer.) 

Q Apparently that is your statement in answer to your 
counsel’s question. Is that the sole, fundamental reason 
that you think nothing should be done with reference to 















0PA Exhibit VT-B 
Page 23 of 24 pages 


(903)this entire situation today? 


A I do not say that nothing should be done. I do not 
know* I do know that it is no time to upset the entire 
rate structure for the purpose of trying to fix a post-war 
rate adjustment. If there is anything that is vital right 
now, and is wrong, I think it should be corrected right 
now, but I have not heard of any such. 

Mr. McConnaughv: That is all. 

Mr. Norman: I would like to ask one question. 

Chairman Aitchison: Is Mr. Hughes finished? 

Mr. Hughes: No, sir. I thought I had become The 


Foregotten Man. 

Mr. Norman: Mr. Chairman, while I am up, I want to 
say, I take it there is no response to Mr. McCollester's 
statement necessary, but I do not want my silence to be 
taken as in any way agreeing to the position he took. 

Mr. Hughes: I think, Mr. Chairman, I will conclude my 
questioning of the witness and submit him for cross examin¬ 
ation. 

Chairman Aitchison: Mr. Norman. 

Mr. Norman: I just want to ask him one thing about 
this post-war situation. 


CROSS EXAMINATION 


Q (By Mr. Norman) Is it not true that if one of these 
plants is located in Official Territory, it has an adjust- 
(904)ment on manufactured articles under which plants operate 

and have operated in the past, and no special consideration 
would have to 'be given before they could determine whether 



' S' ■; % : 









* OPA Exhibit VI-B 

- . Page 24 of 24 pages. 

(904) they could continue in business; v/hereas, if one of these 
plants is in the South or West, there has to be some spe¬ 
cial treatment of it? You recognize that in your statement, 
do you not? 

A No. 

Q Well, I understood that is what you said, that is, if 
you found out what they were going to manufacture or wanted 
to manufacture, you would go in and take up the question 
of giving them an adjustment if possible under which they 
could exist? 

• A Yes. I am referring to the case of a new industry 
opening up in the manufacture of a product in a territory 
where that has not been produced before. 

Q He will have to get special treatment if he is going to 
do that under the existing rate structure obtaining in the 
South, and West, and interterritorially? 

A I think he would have to get special treatment in any 
event. 

Q You think he would have to. 

A I do not think that even if you set up a bunch of rates 
now — I have never seen anything set up in advance that 
would satisfy a new industry. 

(905) Q They have a bunch of rates set up in Official. Terri¬ 
tory, have they not, that these Official Territory repre¬ 
sentatives here say are satisfactory to them, whereas quite 
the contrary is true as to the South and West, is it net- 

A Well, I think you had better talk about Ofiicial ^err^— 
of the representatives of the Official Lines. 


tory to sane 


O.P.A. Exhibit VII - 1 


i 


TABLE 1. 


RAILWAY OPERATING REVENUES, RAILWAY OPERATING EXPENSES AND 
JEW RAILWAY OPERATING INCOME BEFORE FEDERAL INCOME TAXES 

1941 to ;943 
ALL CLASS I RAILWAYS 



(X) 

f 

( 2 ) 

1942 

(3) 

(4) 

(5) 

1943 


(1941) Actual 

Without 

Increase 

At 1942 
Rates 

At 1941 
Rates 

Railway Operating 
Revenues 

5347 

7439 

7139 

8950 

8510 

Railway Operating 
Expenses 

3664 

4578 

4578 

5235 

5235 

Net Railway Operating 
Income Before Fed¬ 
eral Income Taxes 

1172 

2246 

1946 

3050 

2610 


olumn 1, 2 and 3 - OPA Exhibit IX - 1. 


olunn 4 and 5 - Method of estimation explained in Appendix to this Exhibit. 











OPERATING REVENUES OF CLASS I RAILV/AYS 
AGGREGATE AND PER TRANSPORTATION UNIT 
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O.P.A* Exhibit VII 


table 5 


OPERATING RATIOS OF CLASS I RAILWAYS 

1938-1942 ACTUAL 
1943 FORECAST 


Period 

Operating Ratio 
(percent) 

1938 

76.3 

1939 

73.0 

1940 

71.9 

19U 

68.5 

1942 

61.5 

October 1941 

69.S 

October 1942 

55.9 

Forecast 1943 

58.5 


Sources Actual data Interstate Commerce Commission. 
1942 partly estimated. 















OPA Exhibit VII- App.l 


AP PENDIX 


METHOD OF FORECASTING RAILWAY TRAFFIC VOLUMF 
RFVENUFS AND r XP v NSES FOR 1943 


■"his memorandum develops estimates of gross and net railway revenues 
for 1943. Each of the components of the estimate is forecast at the most 
conservative level consistent with a common sense evaluation of recent 
trends. Actually it is probable that railroad revenues both gross and 
net will be well above the forecasts here developed. 

A. Tr affic Volume . 

1. Passenger Miles : The increase in rail passenger traffic which 
took place in 1942 was unprecedented in American history. For the year 
as a whole, the number of passenger miles increased from 29 billion to 
54 billion, and the rate of gain accelerated steadily during the year. 

In January 1942 there were 39 percent more passenger miles than in Janu¬ 
ary 1941. In July 1942 there were 72 percent more passenger miles than 
in July 1941. In November 1942 there were 139 percent more passenger 
miles than in November of 1941. 

As yet there is no sign of a break in the accelerated increase of 
passenger traffic. Furthermore, many of the factors making for increased 
rail traffic will continue to operate in 1943* Inductions into the armed 
forces will equal those of 1942. By the end of the year there will be a 
vastly increased number of soldiers travelling on railroads and soldiers’ 
relatives travelling to visit them, and a vastly accelerated movement of 
army troop trains. The passenger travel in 1942 does not yet reflect the 
diversion to rail traffic throughout the Middle and Far T¥est which will 
result from nationwide gasoline rationing. It is true that capacity will 
limit the total possible passenger miles. In many lines in the Fast, the 
railroads are already pretty close to capacity, but this is far from the 
case in the Middle and Far West. The only positive factor which could 
stop the rise in rail passenger traffic would be a tight rationing of pass¬ 
enger transport. 

Although a further increase in passenger miles beyond the level at¬ 
tained at the end of 1942 is to be expected, .the revenue forecasts used 
in this calculation assume that the upward trend, which was so marked dur¬ 
ing 1942, stopped at the end of that year. This assumption implies that 
passenger miles in December 1943 will equal passenger miles in December 

1942, and that the comparison of each month- of 1943 with the correspond¬ 
ing month of 1942 will show a smaller and smaller percentage change as 
the year progresses. The assumed changes for the months of 1943 com¬ 
pared with the corresponding months of 1942 and the passenger mileage 
computed from them are shown in Tabic 3 of this Exhibit. 

The calculation yields an estimate of 31 billion passenger miles for 

1943, 50 percent above the 1942 total. This increase, of 1943 over 1942, 
it must be emphasized is the result, not of any increase in 1943 itself, 
but of the increase in the level at the end of 1942 as compared with the 
average for 1942. 





» 




/ 










OPA Exhibit VII - App. 2 


Height Ton Miles: In 1942, the railroads handled 640 billion 
revenue ton-miles of freight, an increase of 35 percent over the 1941 
figure. This rate of increase has been steadily maintained throughout 
the year. In November 1942, the railroads hauled 35.6 percent more ton- 
miles than in November 1941. In November 1942, the ton mileage of 
freight traffic was already 9 percent above the average for the year. 

S IT 1 a i. 1~ increased freight traffic will continue in 
1943* -i he volume of munitions production and war construction is sched¬ 
uled to double. Although civilian production will decline, the net ef¬ 
fect will be a substantial increase in industrial production. It is es¬ 
timated by the Commerce Department that the index of industrial oroduc- 
tion will rise from 181 in 1942 to 210 in 1943, an increase of 17 percent. 
The diversion of traffic from trucks and coast-wise shirring to the rail¬ 
roads has not been completed. Furthermore, that diversion which did take 
place was only partly reflected in the 1942 statistics, since it was not 
in existence throughout the year. 

It might be argued that even though there will be a demand for a 
large increase in freight traffic, the railroads will not have the ca¬ 
pacity to handle it. Such an- argument does not recognize the tremendous 
improvement possible and probable in the utilization of railroad equip¬ 
ment. By October 1942, the second month of its full effect, the operations 
of ODT Order No. 1 was already accomplishing the equivalent of an addition 
of more than a hundred thousand freight cars to the railroad stock. The 
effects of OBT Order No. 18 setting minimum load levels - v ere not reflected 
at all in 1942 figures. Furthermore, there can be tremendous gains 
through the shifting of locomotives from the less active lines to the 
more active lines. If all locomotives were operated with the intensity 
of operation of the most efficient lines the capacity of the roads would 
be substantially increased. In addition the WPB has recently increased 
the allocation of equipment to the railroads. 


We have used three methods of forecasting 1943 revenue freight traffic 
The first of these is through the comparison of industrial production with 
freight ton-miles. This comparison is shown in the following table: 



(i) 

(2) 

(3) 


Increase in 

Increase in 

Billions of 


Industrial Production 

Revenue Ton-Mile; 

s Ton-Miles per 

Year 

(index points) 

(Billions) 

Point Increase 

1939 

19 

43 

2.2 

1940 

15 

40 

2.7 

1941 

33 

102 

3.1 

1942 

25 

175 

7.0 

1943 - E 

29 

116 

4.0 

Sources: 

(l) Federal Reserve Board 

. 19^3 Forecast 

by Commerce Departme: 


(2) Interstate Commerce Commission. 1943 Forecast by OPA. 











I 














! 












OPA Exhibit VII - Apr). 3 


In 1939 there was an increase of 2.2 billion freight ton-miles for 
every point increase in the Federal Reserve Board’s Index of Production. 

In 1940 that ratio increased to 2.7; in 1911 to 3• 1 5 and in 1942, when 
the. sharp diversion to rail traffic took dace, the ratio reached 7.0. 

It is not expected that diversions will have such an effect in 1943 
as in 1942. However, on the average, the percentage of total traffic 
handled by the railroads in 1943 will be considerably greater than in 
1942. W e have conservatively estimated, therefore, that in 1943 there 
will be a gain of 4 billion revenue ton-miles for each point increase in 
the Federal Reserve Board's Index of Industrial Production. On this 
basis there will be an increase of 116 billion ton-miles in the 1943 traffic 
bringing the total up to 756 billion. 

/ 

The second method is similar to the first, but it involves a correl¬ 
ation between revenue freight ton-miles on the one hand and gross national 
product in constant orices on the other. A chart is available which shows 
this correlation. On this basis, the raods would haul 760 billion ton- 
miles of freight in 1943. 

The third method is similar to that used for forecasting the increase 
in passenger miles. To take the most conservative viewnoint possible, it 
was assumed that in the fourth quarter of 1943, the volume of freight 
traffic handled by the railroads will exceed that of 1942 by only 10 per¬ 
cent. For the intervening months, it was assumed that the percentage in¬ 
crease over the corresponding month of 1942 would gradually decline from 
the 36 percent which occurred in November 1942, to the 10 percent assumed 
for the fourth quarter of 1943. On this basis there would be 750 billion 
ton-miles of freight in 1943* The detailed computation is displayed in 
Table 4 of this Exhibit. 

X 

Taking the lowest of these three estimates, 750 billion ton-miles, v r e 
have an increase of 17 percent over the 1942 traffic. 

B. P assenger and Freight Reven ues. 

1. Passenger Revenues : Because of the increase in passenger rates, 
the railroads received an average of 1.94 cents p-r passenger-mile during 
1942, an increase of 11 percent over the 1941 average. By October, the 
revenue per passenger-mile had increased to 1.97 cents, 12 percent more 
than the revenue of October 1941. Even if the trend is reversed, and 
there ensues a gradual decline in the revenue per passenger-mile from the 
October 1942 level, such a decline would be unlikely to exceed 5 percent 
by December 1943. In this case, the average for 1943 would be 1.92 cents 
per oassenger-mile, slightly under 1942. ^ith this average revenue per 
passenger-mile, total passenger revenues wculd increase by 43 percent with 
the 50 percent increase in the number of passenger miles. 

2. Freight Revenue : In 1942, the average revenue per freight ton- 
mile was 0.925 cents, 1 percent less than in 1941. Thus, for the year 
as a whole, the increase in freight rates was compensated by shifts in 
the composition of traffic. However, in the latter half of 1942, the 
trend of revenue or freight ton—mile was upward, reaching C.946 cents in 
October, 3 percent above the average for October 1941. During the three 











OPA Fxhibit VII - Ad-. 


years, 1939, 1940 and 1941, when there were no major changes in rates, 
revenues per ton-mile declined from one to two oercent per year. To be 
on the safe side, therefore, we are assuming that revenue per ton-mile 
will decline bv two percent in 1943. On this basis, total revenue will 
increase by 15 oercent. 

With an increase of 48 oercent in passenger revenue and 15 percent 
in freight revenue, we get an over-all increase in revenue of 20 Dercent. 

C. Operating Expenses . 

As a result of the operating economies associated with rising traffic 
volume, railroad operating ratios have rapidly declined since 1939. Last 
year in spite cf higher wages and fuel costs, the operating ratio declined 
more sharply than in any previous year, from 68.5 percent in 1941 to 61.5 
percent in 1942. Less than half of this decline in the operating ratio 
can be accounted for by the rate increase. The remainder is due to oper¬ 
ating economies resulting from the greater volume of operations and from 
the efficiencies brought about by ODT regulations. By September the 
operating ratio was down to 57.3 percent, by October 1942 the operating 
ratio was down to 55.8 percent, a decline of 20 percent from the October 
1941 ratio. The November operating ratio showed a similar sharp decline. 
(See OPA Fxhibit VII) v ven if there had been no increase in rates in 1942 
the operating ratio would have declined by 4*4 points. According to our 
estima + es the increase in traffic in 1943 will amount to about two-thirds 
of the increase which took place in 1942. We therefore expect that the 
operating ratio in 1943 will decline by about two-thirds as much as it did 
in 1942, all other factors being equal. Thus, with rates unchanged, we 
expect a decline in the operating ratio of roughly three points to 58.5 
percent. 

Independent analyses of the trend of fuel costs per unit of operation 
and of labor cost per unit of operation confirm this over-all tendency for 
the operating ratio to decline. 

Applying this reduced operating ratio to the forecast level of 1943 
revenues, we get an estimate of operating expenses of *5,235 million, 
which is 14 percent above the 1942 level. 


Fo r ecast of Operating Income and Expense Statement . 

On the basis of these considerations a forecast of the railroad’s 
income and expense statement for 1943 can be constructed, as follows: 


1. Total operating revenues 

2. Freight (750 billion ton-miles at 

C. Q 07?) 

3. Passenger (Cl billion passenger miles 

at 1.92^) 

4. All other (assuming that freight and 

passenger account for 93*4$ of the 
total as in 1942) 


$8,950 Million 
6,800 
1,555 


595 








OP A Exhibit VII - App. 5 


5. Total operating expenses { 5 ?. 5 % of total 

operating revenues 5,235 

6. Net operating revenue 3,715 

7. Railway tax accruals, excluding Federal 

income and excess profit taxes: (ex¬ 
plained below) 465 

8. Equipment and joint facility rents, debit 

(continuation of current annual rate) 200 

9. Net railway operating income before income 

taxes 3,050 


Note on taxes: Exclusive of Federal income taxes, railroad 
taxes consist chiefly of payroll taxes under the Rail¬ 
road Retirement and Carrier Taxing Acts and of a group 
of relatively constant taxes such as state real property 
taxes, excise taxes, and capital stock taxes. These 
constant taxes vrill amount to approximately $260 million 
in 1942 and to $270 million in 1943* 


In 1942, payroll taxes amounted to 5.86 percent of all payrolls, 
which in turn represented 64.2 percent of total operating expenses. 
Ee therefore estimate: 


Payrolls (64.2$ of operating expenses) 


$3,360 million 


Payroll taxes (5.86$ of payrolls) 
Other taxes 
Total taxes 


195 million 

_ 270 m illion 

$ 465 million 








- 






















































OPA Exhibit VIII - 2 


TABLE 2 

NET INCOME AND PEACE-TIME AND WAR-TIME FEDERAL. INCOME TAXES 

24 LARGE CLASS I RAILROADS 
1942 


( 1 ) ( 2 ) 

Actual Excluding 

Increases 
from 

Ex Parte 148 a/ 
(millions of dollars) 


1. 

Net income for 11 months (ICC — 

after taxes) 

672 

— 

2. 

Net income for the year (after taxes) 




(Estimated as line 1 x 12) 


733 

632 


11 




3. 

Normal tax and surtax 


451 

389 

4. 

Excess profits tax 


127 

63 

5. 

Net income before Federal income 

taxes 




(lines 2/3/4) 


1311 

1084 

6. 

Normal tax b/ 


305 

250 

7. 

Net income after normal tax 





(line 5 minus line 6) 


1006 

834 

8. 

Ratio of net income after normal 

tax 




to net income after war taxes 





(line 7 divided by line 2) 


1.37 

1 


&/ Estimated by applying ratio of estimated net income excluding increases of Ex 
Parte 148 to estimated actual net income for the year (Exhibit III, Table 1, 
line 4, colums 2 and 3) to the net income before taxes (line 5). The taxes of 
each company were reduced according to its 1942 tax position. 

b/ Normal tax is estimated at 24^ of statutory net income. Statutory net income 
is estimated by dividing normal tax and surtax (line 3) by 0.40 (the rate of 
the two taxes combined) and adding the amount of excess profits tax divided 

by 0.90. , 

Sources: , 

(1) Net income for 11 months: Duplicates of November reports by the 

various railroads to the Interstate Commerce Commission. 

(2) Normal tax, surtax, and excess profits tax: Estimates made by the 
various companies for a special survey of the Association of 
American Railroads, December, 1942. 


1-2699 P5 nobu 























OPA Exhibit VIII - 3 


NOTE TO EXHIBIT VIII. TABLE 2 


Table 2 shows profits of 24 large railroads after the normal 
Federal income tax, and compares them with profits after all war-time 
taxes. Profits of these companies would have been 37 percent greater 
without the surtax; and excess profits taxes (line 8) and would have 
been over 800 million dollars even if the increase granted by Ex Parte 
148 had not been granted (line 7). It should be noted that 24 percent 
is a generous figure for a normal or peace-time rate of tax, since 
rates have varied between 10 percent and 19 percent over the past 20 
years. 


This study is derived from a telegraphic survey conducted 
by the Association of American Railroads on December 10, 1942, cover¬ 
ing 24 railroads accounting for about 75 percent of the revenues of 
all Class I roads. This survey shows that 11 of the 24 roads will 
pay excess profits taxes on their 1942 incomes. The same survey shows 
that 22 of the 24 roads estimate that they would have been liable to 
excess profits taxes if they did not have net loss and excess profits 
credit carry-overs from previous years. 

If we assume that every road would have had its net revenue 
decreased proportionately by exclusion of the revenue derived from the 
rate increases of Ex Parte 148 (according to the ratio indicated by 
Exhibit III: $1429 to $1729 million) it appears that 6 of the 24 
would have been liable to excess profits taxes even after using their 
net loss and credit carry-overs. Without these carry-overs, 21 of 
the 24 would have fallen in the "excess" brackets. Thus it appears 
that even without the benefit of Ex Parte 148, 21 out of 24 of these 
roads would have had "excess" earnings in 1942. The names of the 
railroads covered in the survey follow: 

(1) Atcheson, Topeka and Sante Fe, (2) Atlantic Coast Line, 

(3) Baltimore and Ohio, (4) Boston and Maine, (5) Chesapeake 
and Ohio, (6) Chicago, Burlington and Quincy, (7) Chicago, 
Milwaukee, St. Paul and Pacific, (8) Chicago, Rock Island and 
Pacific, (9) Erie, (10) Great Northern, (11) Illinois Central 
(including Yazoo and Mississippi Valley), (12) Louisville and 
Nashville, (13) Missouri Pacific, (14) New York Central, (15) 

New York, Chicago, and St. Louis, (16) New York, New Haven and 
Hartford, (17) Norfolk and Western, (18) Northern Pacific, 

(19) Pennsylvania, (20) Reading, (21) Southern, (22) Southern 
Pacific System, (23) Union Pacific, (24) Wabash. These com¬ 
panies receive approximately 75^ of the revenue of class I 
railroads. 


1-2599 P6 nobu 



































' 
























































































O.P.A Exhibit IX -1 


RAILWAY OPERATING REVENUES, OPERATING EXPENSES, AND NET OPERATING 
INCOME BEFORE FEDERAL INCOME TAXES, 1921 TO 1942, 

ALL CLASS I RAILROADS 



(1) (2) 

Railway Railway 

Period Operating Operating 

Revenues Expenses 

(millions of dollars) 

(3) 

Net Railway 
Operating Income 
Before Federal 
Income Taxes 

1 . 

1921 

5517 

4563 

628 

2. 

1922 

5559 

4415 

802 

3. 

1923 

6290 

4895 

1029 

4. 

1924 

5922 

4508 

1037 

5. 

1925 

6123 

4537 

1198 

6. 

1926 

6383 

4669 

1319 

7. 

1927 

6136 

4574 

1151 

8 . 

1928 

6112 

4428 

1259 

9. 

1929 

6280 

4506 

1338 

10. 

1930 

5281 

3931 

907 

11. 

Average 1921-1930 

5960 

4503 

1067 

12. 

1931 

4188 

3224 

533 

13. 

1932 

3127 

2403 

333 

14. 

1933 

3095 

2249 

488 

15. 

1934 

3272 

2442 

478 

16. 

1935 

3452 

2593 

519 

17. 

1936 

4053 

2931 

698 

18. 

1937 

4166 

3119 

622 

19. 

1938 

3566 

2722 

392 

20. 

1939 

3995 

2918 

622 

21. 

1940 

4297 

3089 

742 

22. 

Average 1931-1940 

3721 

2769 

~54 T 

23. 

Average 1921-1940 

4841 

3636 

~ tot 

24- 

Average 1936-1939 

3945 

2923 

584 

25. 

1941 

5347 

3664 

1172 

26. 

1942 

(a) Actual rates 1/ 

7439 

4578 

2246 2/ 


(b) Excl. increases 
resulting from 
Ex Parte 143 3/ 

7139 

4578 

1946 


1/ Actual through November* Estimated for December from "Monthly Comment 
on Transportation Statistics," I*C.C* January 7, 1943, Table p. 3« 

2/ Federal income taxes accrued at 1942 annual rate of 790 million dollars* 
Based on 11 months tax accruals and estimated for December (ICC-M-125) • 

Based upon 9 percent increases in passenger fares and 4.7 percent 
increases in freight rates, as a result of Ex Parte 143. 

Col. 3 — Federal income taxes computed from total U. S. government taxes for 
1921-32 by subtracting estimated amount of capital stock taxes and 
miscellaneous Federal taxes, as follows: 

1921-1925 110,000,000 

1926-1931 2,000,000 

1932 5,000,000 

Source: "Statistics of Railway of Class I, U. S. 1920—1941, 11 Association of 
American Railroads, "Statistics of Railways in United States," 
Interstate Commerce Commission. 


1-2053 nobu- 






































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•'N 








■ 








A 


’ 













































































































































' 

’ 







' 



























V. 













O.P.A. Exhibit IX - 2 


TABLE 2 

COMPENSATION TO EMPLOYEES, ACTUAL AMOUNT, PERCENT OF RAILWAY OPERATING REVENUES, 
PERCENT OF RAILWAY OPERATING EXPENSES AND OPERATING RATIO 1929 - 1942 

ALL CLASS I RAILWAYS 



Period 

(1) (2) (3) (4) 

Compensation Railway Railway Percent 

to Employees operating operating compensation 

revenues expenses of railway 

operating, 

(millions of dollars) revenues 

(5) 
Percent 
compensation 
of railway 
operating 
expenses 

(6) 

Operating 

ratio 

1. 

1929 


$ 2897 

$6280 

$4506 

46.1 

64.3 

71.8 

2. 

1930 


2551 

5281 

3931 

48.3 

64.9 

74.4 

3. 

1931 


2095 

4188 

3224 

50.0 

65.0 

77.0 

4. 

1932 


1513 

3127 

2403 

48.4 

63.0 

76.9 

5. 

1933 


1404 

3095 

2249 

45.4 

62.4 

72.7 

6. 

1S34 


1519 

3272 

2442 

46.4 

62.2 

74.6 

7. 

1935 


1644 

3452 

2593 

47.6 

63.4 

75.1 

8. 

1936 


1349 

4053 

2931 

45.6 - 

63.1 

72.3 

9. 

1937 


1985 

4166 

3119 

47.6 

63.6 

74.9 

10. 

1938 


1746 

3566 

2722 

49.0 

64.1 

76.3 

11. 

1939 


1863 

3995 

2918 

46.6 

63.8 

73.0 

12. 

1940 


1964 

4297 

3089 

45.7 

63.6 

71.9 

15. 

Average 1§31 

- 1940 

1758 

3721 

2769 

47.2 

63.5 

74.4 

14. 

Average 1936 

- 1939 

1861 

3945 

2923 

“4772" 

63.7 

TO"" 

15. 

1941 


2336 

5347 

3664 

43.7 

63.8 

68.3 

16. 

1942 









a) 

Actual rate 

2939 

7439 

4578 

39.5 

64.2 

61.5 


b) 

Excluding 









increases 









resulting 









from Ex Parte 








148 

2939 

7139 

4578 

41.2 

64.2 

64.1 


Sources: 

Column 1, 2 and 3, Line 1 to 15 Statistics of Railways in the United States, 

Interstate Commerce Commission 

Column 1, Line 16 64.2$ of Railway operating Expenses (ten month, 1942, average) 

Column 2 and 3, Line 16 Interstate Commerce Commission, Monthly Comment on Transportation 

Statistics, January 7, 1943 


Note: . _ 

(1) Compensation to employees as used in this exhibit incxudes compensation to Executives, 

Officials, Staff Assistants, Professional and Sub-professional Assistants, which amounted 
to about 100 million dollars in 1942 (actual ten month and estimated for November and 

December). .... ^ 

(2) 5 to 6 percent of total compensation as used in this exhibit is not chargea^xe to operations 

(based on data from 1936 to 1941, Interstate Commerce Commission). 


1-2653-nobu-»p 









































































































































































OPERATING RATIO OF CLASS I RAILWAYS 

SELECTED YEARS AND 1936-1942 



1-3V61 notw-OBvwi 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO. 3229 







































































































% 






O.P.A. Exhibit IX - 3 

TABLE 3 

RAILWAY OPERATING EXPENSES BY MAJOR COMPONENTS 

1921-1942 

ALL CLASS I RAILWAYS 



Period 

X 

* 

a) 

Total 

Railway 

Operating 

Expenses 

(2) (3) (4) 

Maintenance Maintenance Transpor- 
of Way and of tation 

Structure Equipment (rail and 

water) 

(millions of dollars) 

(5) 

All 

Other 

1. 

1921 

4563 

756 

1252 

2262 

293 

2. 

1922 

4415 

729 

1252 

2150 

284 

3. 

1923 

4895 

814 

1465 

2321 

295 

4. 

1924 

4508 

793 

1260 

2152 

303 

5. 

1925 

4537 

817 

1260 

2138 

322 

6. 

1926 

4669 

867 

1283 

2181 

338 

7. 

1927 

4574 

868 

1219 

2137 

350 

8. 

1928 

4428 

838 

1167 

2070 

353 

9. 

1929 

4506 

855 

1203 

2080 

368 

10. 

1930 

. 3931 

706 

1019 

1848 

358 

11. 

Average 1921-1930 

. .4503 

804 

1238 

2134 

327. 

12. 

1931 

3224 

531 

817 

1544 

332 

13. 

1932 

2403 

351 

619 

1158 

275 

H. 

1933 

2249 

322 

599 

1078 

250 

15. 

1934 

2442 

365 

638 

1164 

275 

16. 

1935 

2593 

394 

682 

1253 

264 

17. 

1936 

2931 

455 

783 

1405 

288 

18. 

1937 

3119 

496 

827 

1510 

286 

19. 

1938 

2722 

420 

676 

1362 

264 

20. 

1939 

2918 

467 

766 

1418 

267 

21. 

1940 

3089 

497 

819 

1501 

272 

22. 

Average 1931-1940 

2769 

430 

723 

1339 

277 

23. 

Average 1921-1940 

.3636 

617 

930 

1737 

302 

24. 

Average 1936-1939 

2923 

460 

763 

1424 

276 

25. 

1941 

3664 

603 

992 

1775 

294 

26. 

1942 

4578 

794 

1208 

2227 

349 


Sources: Line 1-25 "Statistics of Railways of Class I, U. S. 1920-1941." 

Line 26 Column (1) Actual through November and estimated for December 
from "Monthly Comment on Transportation Statistics," 

Interstate Commerce Commission, January 7, 1943. 

Column (2)-(5) Pro-rata distribution based on eleven month 
actual figures, Interstate Commerce Commission, Statement M-10Q. 


1-2553 nobu-*p 





































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■ 








■ 























O.P.A. Exhibit IX - 4 


TABLE 4 

COST AND CONSUMPTION OF FUELS 
CLASS I RAILWAYS 

Monthly, 1941 and 1942 
(Indexes, 1941 - 100) 



Index of Fuel 
Consumption 

Per Net Ton Mile 

Index of 

Fuel Prices 

Index of Fuel 
Cost Per Net 
Ton Mile 

1939 

106.4 

97.0 

103.4 

1940 

104.0 

95.5 

99.7 


January 

112.1 

95.5 

107.3 

February 

112.8 

96.0 

108.6 

March 

107.0 

96.0 

103.1 

April 

113.9 

100.5 

114.8 

May 

93.6 

100.7 

94.5 

June 

90.9 

100.6 

91.6 

July 

89.6 

100.9 

90.6 

August 

87.8 

100.3 

88.7 

September 

90.5 

101.8 

92.5 

October 

94-3 

101.7 

96.2 

November 

100.2 

101.9 

102.5 

"December 

107.0 

102.1 

109.6 

Average 

100.0 

100.0 

100.0 

22&Z. 

January 

111.1 

103.0 

114.7 

February 

107.9 

104.2 

112.6 

March 

101.1 

104.0 

105.4 

April 

93.8 

104.1 

97.8 

May 

89.0 

104.0 

92.8 

June 

85.5 

104.2 

89.2 

July 

83.8 

105.0 

88.2 

August 

83.8 

105.4 

88.5 

September 

85.7 

105.4 

90.6 

October 

88.3 

105*5 

93.4 

November 

94.0 

106.3 

100.1 

December 

11 Months Average _ , 

1941 

99.3 

99.7 

77 •-!- 

1942 

93.1 

104.7 

97.6 


Source: 


All data from the Interstate Commerce Commission. 


1-2892-P0BU-P0-WP 





























O.P.A. Exhibit IX - 5 

TABLE 5 

UNIT RETURNS AND EXPENSES OF CLASS I RAILWAYS 
Monthly, 1941 and 1942 
(Index© b, 1941 « 100) 




Operating 
Revenue Per 
Traffic Unit 

Operating 
Expense Per 
Traffic Unit 

Net Railway Operating 
Income, Before Federal 
Income Taxes, Per 
Traffic Unit 

1939 

104.7 

111.5 

74.3 

1940 

101.8 

106.7 

80.1 

1941 

January 

99.9 

103.3 

83.5 

February 

100.5 

104.6 

83.2 

March 

99.1 

98.3 

100.1 

April 

111.7 

119.5 

80.4 

May 

- 99.6 

97.3 

105.6 

June 

99.3 

95.1 

112.5 

July 

100.8 

94.1 

123.8 

August 

95.9 

89.1 

120.1 

September 

99.7 

92.9 

123.3 

October 

99.4 

101.2 

95.0 

November 

96.9 

103.8 

74.5 

December 

101.5 

108.8 

81.7 



Average 

100.0 


1242 

97.5 


January 


February 

99.3 


March 

99.9 


April 

101.5 


May 

97.4 


June 

101.6 


July 

101.4 

August 

100.0 


September 

102.4 


October 

November 

December 

103.7 


100.0 

100.0 

103.1 

80.1 

102.7 

88.9 

97.1 

111.4 

94.8 

125.0 

88.6 

128.5 

89.9 

141.9 

86.8 

153.6 

85.2 

153.6 

85.5 

162.7 

84.4 

170.4 


10 Months Average _ , 

1941 

1942 100.5 91*5 


Source: All data from the Interstate Commerce Commission. 


102.8 

131.6 


1-2892-NOBU-PU-WP 





















































































' 

















« 

































O.P.A. - Exhibit X 


NET RAIL.AY OPERATING INCOME BEFORE FEDERAL INCOME TAXES, NON-OPERATING 
INCOME, TOTAL DEDUCTIONS FROM INCOME AND NET INCOME BEFORE AND AFTER 
FEDERAL INCOME TAXES, 1921 TO 1942, AT.T. CLASS I RAILROADS 


• 


(1) 

Net Railway 
Operating 
Income Be¬ 
fore Federal 
Iaoome Taxes 

(2) (3) (4) 

Non-Operating Total De- Net Income 
Income ductions Before 

from Federal 

Income Income 

Taxes 

(millions of dollars) 

(5) 

Net Income 
After 
Federal 
Income 
Taxes 

1. 

19 21 

628 

375 

662 

341 


314 

2. 

1922 

802 

265 

655 

412 


370 

3. 

1923 

1029 

261 

668 

622 


555 

4. 

1924 

1037 

269 

685 

621 


558 

5. 

1925 

1198 

268 

688 

778 


701 

6 r 

1926 

1319 

298 

702 

915 


809 

7. 

1927 

1151 

311 

706 

756 


673 

8. 

1928 

1259 

320 

706 

873 


787 

9. 

1929 

1338 

360 

714 

984 


89 7 

10. 

1930 

907 

359 

704 

562 


524 

11. 

Average 1921-1939 

1067 

309 

689 

686 


619 

12. 

1931 

&33 

306 

696 

—nr - 


135 

13. 

1932 

533 

225 

690 

Def. 132 

Def 

. 139 

14. 

1933 

488 

211 

691 

8 

Def 

. 6 

15. 

1934 

478 

203 

683 

Def. 2 

Def 

. 17 

16. 

1935 

519 

188 

680 

27 


8 

17. 

1936 

69 8 

184 

687 

195 


165 

18. 

1937 

622 

175 

667 

130 


98 

19. 

1938 

39 2 

155 

652 

Def. 105 

Def 

. 123 

20. 

1939 

622 

161 

657 

126 


93 

21. 

1940 

742 

169 

663 

248 


189 

22. 

Average 1931-1940 

543 

198 

677 

64 


40 

23. 

Average 1921-1940 

805 

. 253 

683 

375 


330 

24. 

Average 1936-1939 

584 

169 

666 

87 


58 

25. 

1941 

1172 

177 

675 

674 


500 

26. 

1942 








(a) Actual rates 

2246 

178 

695 

1729 


939 


(b) Excluding in 

- 







creases result- 







ing from Ex 








Parte 148 

1946 

178 

695 

1429 


776 


Def. - Deficit 

Sources: Col umn (l) - Lines 1 to 13 - Net Railway Operating Income, Interstate 

Commerce Commission, Statistics of Railways in the U. S. 
plus Federal Income taxes computed from total U. S. govern¬ 
ment taxes for 1921-1932 by subtracting estimated amount of 
capital stock taxes and miscellaneous Federal taxes, as fol¬ 
lows : 

1921-1925 $10,000,000 

1926-1931 2,000,000 

1932 5,000,000 

Lines 14 to 25 - Statistics of Railways in the U. S., Inter¬ 
state Commerce Commission. 

Line 26 - Federal Income Taxes accrued at 1942 annual rate 
of $790 million are 45.7?o of net income before Federal Income 
Taxes. 

Columns (2), (3), (5) - Lines 1 to 25 - Statistics of Railways in the U.S., 
Interstate Commerce Commission. 

Line 26 - First ten months actual (Interstate Commerce Com¬ 
mission M-125) and November and December estimated. 

Column (4) - Column (1) ♦ Column (2) - Colum (3). 


1-2 55 3 nobu-wp 
















CHART I 


O.P.A. EXHIBIT X 


NET INCOME OF CLASS I RAILWAYS 

BEFORE AND AFTER FEDERAL INCOME TAXES 

(1921-1942) 



SOURCE Interstate Commerce Commission 


NOTE 1942 partly estimated 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO 3224 


l-2W| iiou>-tvi>-<> 

































































































- 










. 






O.P.A. EXHIBIT X - 2. 


TABLE 2 

NET RAUffAT OPERATING INCCME, BEFORE FEDERAL INCOME AND EXCESS 
PROFITS TAXES, AS A PERCENT OF OPERATING REVENUE 

CLASS I RAILWAYS 
1921 - 1942 


Year 

Percent 

Year 

Percent 

1921 

11.4 

1932 

10.6 

1922 

14.4 

1933 

15.8 

1923 

16.4 

1934 

14.6 

1924 

17.5 

1935 

15.0 

1925 

19.6 

1936 

17.2 

1926 

20.7 

1937 

14.9 

1927 

18.8 

1938 

11.0 

1928 

20.6 

1939 

15.6 

1929 

21.3 

1940 

17.3 

.1930 

17.2 

19a 

21.9 

1931 

12.7 

1942 

At actual rates 

30.2 



At rates which exclude 
increase of Ex Parte 
148 

\ 

27.3 

Source: Data 
and 

from Interstate Commerce i 
excess profits taxes, 1921 

Commission. Federal income 
- 1933 estimated. 

• 


1-257 5 





















•• 

. 





















' 

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, 


















O.P.A. EXHIBIT X 


CHART 2 

NET RAILWAY OPERATING INCOME 

PERCENT OF,OPERATING REVENUES 

CLASS I RAILWAYS 

1921—1942 


PERCENT 


30 



PERCENT 
35 


— 25 


20 


15 


10 


^Before Federal income and excess profits taxes 
SOURCE Interstate Commerce Commission 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO 3223 








































O.P.A. Exhibit XI - 1 


STATEMENTS OF RAILROAD REPRESENTATIVES 
TO CONGRESSIONAL COMMITTEES RESPECTING INCOME 

TAXES 

Mr. R. V. Fletcher, ^ice President, Association of American 
Railroads "before the Committee on '/Vays and Means, House of Representativ es 

in Hearings on Revenue Revision cf 1942, "April 1, 1542, 

"The changes which we advocate will have the effect, we think, 
of improving the situation of the carriers in important respects, not 
only in time of war but in time of peace as well. I disclaim, therefore, 
at the outset, any purpose to suggest that the railroads be put in a pre¬ 
ferred class or that they be permitted to escape their fair burden of tax¬ 
ation." (page 1798) 

"They have no disposition to shirk their responsibility in any 
respect, whether that responsibility takes the form of employing extraordi¬ 
nary efforts to move the traffic or the form of paying their fair share 
of the tax burden resting upon the American people. They ask for no spe¬ 
cial favors; they seek no extraordinary advantages. In making the sugges¬ 
tions which follow, the railroads ask for no treatment except of a nature 
which will recognize their peculiar situation and the importance of pre¬ 
serving them as essential war instrumentalities." (page 1800) 

From written statement by Marcus L. Bell, General Counsel, the 
Chicago, Rock Island and Pacific Railway Company submitted by Mr. R. V. 
Fletcher to the Committee on Finance, United States Senate, August 5, 1942, 

in Hearings on H.R. 7378,- Revenue Act of 1942. 

"This is not saying that railroad corporations like all other 
properties should not pay the regular and normal rates of income tax appli¬ 
cable to all persons, whether corporate or individual. It is saying that, 
until the company has earned a fair return on its investment, the reduction 
of the invested capital base is as much a confiscation of property as a 
reduction of rates to a level ’which would preclude a fair return." (Matter 
quoted appears on page 867, Mr. Fletcher’s offer of the statement on page 
861 ) 


-1-2898-IOB0-PU-WP 
















O.P.A. EXHIBIT III - 1 


Table 1 

Selected Balance Sheet Accounts, 1989, 1940, 1941, 1948 
Class I Line-haul Railways 


4U- 


Ul 






J*L 


Account 


1989 


1940 


1941 


1948i/ 


Assets 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 


Current Assets 

Cash $ 

Loans, Drafts & Deposits 
Loans &, Bills Receivable 
Materials & Supplies 
Interest & Dividends Received 
Rents Receivable 
Other Current Assets 

Total Current Assets 

Net Current Assets 


515,375,569 

848,611,885 

435,505,509 

470,078,929 

39,682,536 

1,701,613 

i * no* A**'* 


$ 685,614,305 
436,916,115 
2,825,587 
334,675,569 
15,578,258 
1,395,728 
5.143,432 
1,442,142,928 
744,943,319 


$ 769,390,047 
340,683,159 
320,702,505 
460,105,557 
16,770,458 
1,116,073 
5,775,921 
1,914,543,720 
799,223,402 


5 1,066,958,777 
1,329,454,4L9 
985 

515,739 £30 
24,084 £33 
1,451£27 
14.266.616 

2,952,940,552 
1,239,09 7,468 


11 Investments 

12 Deferred Assets 

13 Unadjusted Debits 

14 Total Assets 


26,223,527,239 25,913,898,898 25,889,496,634 - 2/ - 

205,382,262 279,003,070 281,770,633 - 8/ - 

325.662.197 160.106.352 206,737.485 - 2/ - 

28.472,525.162 27.795,151.248 88.232.548,472 


y 

2 / 


As of October 31, 1942. 
Data not yet available. 


1-2575 




































/ 



















\ 










I 


































O.P.A. EXHIBIT XII - 2 


Table 1 

Selected Bala n ce Sheet Accounts, 1929,1940,1941>1942 
Class I Line-haul Railways 
(continued) 




121 


121 


HI 


151 


Ac count 


1929 


1940 


1941 


19421/ 


Liabilities 


Current Liabilities 


Loans & bills Payable 

Wages Payable 

Traffic Balances 

Other Current Liabilities 

$ 71,240,230 
389,117,891 
120,023,913 
620.601.733 

$ 92,583,653 
224,025,957 
98,528,613 
282.061.386 

$ 57,293,193 
326,198,461 
57,290,468 
674.538,196 

$ 32,288,950 
325,887,574 
114,533,872 
L241.133.068 

Total Current Liabilities 

Net Current Assets 

1,200,983,767 

516,969,697 

697,199,609 

744,943,319 

1,115,320,318 

799,223,402 

3,713,843,464 

3,239,097,468 

Deferred Liabilities & Unadjusted 

Credit 2,860,191,693 

5^044,172,637 

5,122,919,134 

- 2/ - 

Long Term Debit 

Funded Debit 

Other Debit Certificates 

10,700,494,048 

437,627,143 

9,620,530,367 

3,667,774,700 

^625,612,383 

3,560,450,724 

-2/ - 
-2/ - 

Corporate Surplus 

5,029,171,283 

2,474,248,865 

2,666,624,947 

- 2/ - 

Capital Stock 

8,237,540,604 

8,201,705,930 

8,055,439,540 

- 2/ - 

Grants in Aid of Construction 

6,516,624 

77.539,638 

86.181,426 

- 2/ - 

Total Liabilities 

28,472,525,162 27,795,151,248 

8,832,548,472 



1/ As of October 31, 1942. 

2/ Data not yet available. 

Source: Interstate Commerce Commission, Statistics of Railways in the 
United States, 1929, 1940, 1941, and monthly reports. 




1-2575 








































/ 




O.P.A. Exhibit XII -3 


TABLE 2. 

•Long Term Debt Actually Outstanding and Current Liabilities 
Class I Line-haul Railways, 1929, 1940, 1941 


(In Thousands of Dollars) 


il) ..-.(2) .. .....faL.. (4) 




As 

of December 31 



Item 

1929 

1940 

1941 


1. 

Long Term Debt 

$ 8,001,964 

| 7,695,023 

$ 7,664,071 

2. 

Mortgage Bonds 

3. 

Collateral Trust Bonds 

642,638 

720,179 

668,022 

4. 

Income Bonds 

348,543 

- 

- 

5. 

Unsecured Bonds 

- 

591,067 

569,922 

6. 

Equipment Obligations 

982,472 

480,520 

624,593 

7. 

Misc* Obligations 

662,172 

114,412 

71,307 

6. 

Total 

10,637,769 

9,601,201 

9,617,915 


9* Current Liabilities 




10* Notes & Bills Payable 

71,240 

92,584 

57,293 

11* Other Current Liabilities 

1,129,744 

604,616 

1.058,027 

12. Total 

1,200,984 

697,200 

1,115,320 


Source: Interstate Commerce Commission, Statistics of Railways in 
frfie United States , 1929, 1940, 1941. 


1-2599 P4 nobu 



























TABLE 1 Exhibit XIII 

BAILWAY OPERATING REVENUE, RAILWAY OPERATING EXPENSES, 

AND NET RAILWAY OPERATING INCOME BEFORE FEDERAL INCOME TAXES PER TRAFFIC UNIT, 1929 - 1943. 


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Sourcest - Column 1 - Traffic units computed as follows: Net ton-miles plus a multiple of revenue passenger miles. This multiple 

represents the ratio of revenue per passenger miles to revenue per ton-mile for the respective year iq4? 
Traffice Units were based on estimated net ton-miles of 684. g billion and passenger miles of 54 billion? 

Column 2, 4, and 6 - Lines 1 to l6 Exhibit IX-I 

Line 17 Exhibit VII 
























CHART I 


0 P A EXHIBIT TTT 


REVENUE TON-MILES 
AND AVERAGE WEEKLY CARLOADINGS 

ALL CLASS I RAILROADS 


MONTHLY, 1939-1942 


CARLOADINGS 

(THOUSANDS) 

1050 


1000 


TON MILES 

(BILLIONS) 


TON MILES 

(BILLIONS) 


950 


90 0 


850 


800 


750 


700 



650 


600 


550 



65 


60 


55 


• 50 


I— 45 


40 


3 5 


- 30 


2 5 


20 


I 5 


CARLOADINGS 

(THOUSANDS) 

1050 


1000 


9 50 


900 


850 


800 


75 0 


700 


650 


600 


550 


193 9 


19 40 


1941 


19 4 2 


' J Estimated for November ond December 1942 on bas.s of 640 billion ton-miles for 1942 
from RAILWAY AGE, January 2, 1943, page I. 


SOURCE : 


Revenue 

Averoge 


Ion-miles .. Interstate Commerce Commission, M-220. , 

leekly Carloadings . Association of American Roilroods, CS54A and CS54B 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO. 3206 


I-XM ioU»-'u»>wts 













































































I 














OoP JU Exhibit UV-A 




OFFICE OF WAR INFORMATION 
OFFICE OF DEFENSE TRANSPORTATION 


ODT-45 

loading of less-than-carload, or merchandise, freight was 
achieved "by railroads in November, 1942, the Office of Defense Transportation 
announced today. Reports to the ODT from 116 Class I railroads disclosed that while 
seasonal trends reduced the total volume of l.c.l. freight moved in November, the 
average load per car rose to 20,704 pounds, compared with 20,592 pounds in October 
and 20,566 pounds in September. 

Since September 1, ODT’s General Order No. 1 has required l.c.l. freight, with 
certain exceptions, to be loaded to a minimum of 20,000 pounds per car. Such freighi 
was loaded in 1941 to an average of only slightly over five tons per car. General 
Order No. 1 instituted a minimum load requirement of six tons on May 1, 1942. This 
was stepped up to eight tons on July 1 and to 10 tons on September 1. Heavier 
loading of merchandise freight, ODT officials explained, has released thousands of 
freight cars for other service, effected savings in motive power, and relieved 
strains on yard and terminal facilities. 

In November the 116 reporting Class I railroads together handled 8,080,377,157 
pounds of l.c.l. freight, or 854,309,663 pounds less than in October. While the 
average load per car, for Class I roads as a whole, was 112 pounds higher in November 
only 44 roads reported average loads exceeding the 10-ton requirement. Sixteen roads 
failed to attain an average weight of five tons per car. In cases of failure to 
meet the 10-ton requirement, cars were leaded and operated under exceptions to 
General Order No. 1. 

Class II and Class III railroads -- the short lines and switching and terminal 
companies -- increased the average load of merchandise freight per car from 17,405 
pounds in October to 17,646 pounds in November. Electric railways, separately 
classified for the first time in the ODT report for November on merchandise traffic, 
showed an average load per car of 15,781 pounds. 

Average loads of l.c.l. freight shipped by freight forwarding companies rose 
from 38 ; l8l pounds in October to 41,939 pounds in November. The large increase in 
average loadings by freight forwarding companies, which assemble individual shipments 
into carload lots, reflected the subjection of such shipments to -the loading require¬ 
ments of ODT 1 s General Order No. 18, applying to carload freight. 


Patch-76309 

For Immediate Release 
Saturday, January 23, 1943 

A new record in heavy 


The accomplishments of all classes of carriers in achieving higher average loadc # 
per car for merchandise traffic in November, as compared with October, in spite of 
the decreased volume of traffic handled, clearly indicate, ODT officials said, their 
continued and intensified cooperation. 




n n n 11 ji 
tnmrfr 


1-2599 PI of 12 nobu-pun-wp 








































V 
















Patch—76309 


O.P.A..Exhibit XIV-B 


OFFICE OF WAR INFORMATION 
OFFICE OF DEFENSE TRANSPORTATION 


For Immediate Release 

Thursday, December 24, 1942 PM-4247 

Initial reports on operation of the Office of Defense Transportation’s 
General Order No* 13, establishing minimum limits for loading of carload freight, 
indicate that application of the order is resulting in substantial savings of 
cars and motive power, the ODT announced today* 

General Order No* IS, which became effective November 1, requires civilian 
freight shipped in carload lots to be loaded, with certain exceptions, to the 
full visible capacity of the car or to its marked weight capacity* Reports 
received by ODT show that in November, as compared with October, there were in¬ 
creases in average weight of loads per car, for several commodities, ranging from 
14 to over 22 per cent. 

Two large steel companies reported they had increased loadings in November, 
over October, from 44*8 to 49.9 tons a car in one case and from 48.2 to 54*3 
tons in the other case* Florida citrus fruits showed a 224 percent increase in 
average loadings per car. Three feed mills in the Middle West raised the average 
weight of their loadings from 60,333 to 68,925 pounds, a gain of 14.2 percent. 

ODT officials said that if carload freight movements as a whole showed an 
increase in weight of loadings averaging as high as 15 percent, there would be a 
resultant saving of possibly 75,000 freight cars weekly, with proportionate sav¬ 
ings of motive power. The officials stressed the savings of motive power and the 
relief afforded heavily taxed terminal facilities. They explained that the car 
savings, while important from the standpoint of conserving equipment, were 
secondary, since the car situation is not immediately critical. 

Loadings of carload freight have been increasing steadily for several years. 
The average of tons per car, for all carload traffic in the United States, rose 
from 35.S tons in 1933 to 36.8 tons in 1939, 37.7 tons in 1940, and 38.2 tons in 
1941. In the second quarter of 1942 a new high record of 40.6 tons was achieved. 

General Order No. 18, ODT officials pointed out, was issued largely for the 
purpose of reinforcing this favorable trend. Some shippers, they explained, had 
been unable to load cars to capacity without yielding a competitive advantage to 
others shipping the same commodity more frequently in smaller carload lots. 
General Order No. 18 was intended to eliminate such situations by requiring com¬ 
petitors to conform to uniform shipping practices. 

The ODT said that while the great majority of shippers voluntarily were com¬ 
plying fully with the terms of the order some were attempting to take undue ad¬ 
vantage of exceptions or were applying for special permits, in order to continue 
practices against which the order was aimed. Thile recognizing that the order 
might cause serious inconvenience in some instances, ODT officials emphasized 
that it was an essential war measure. They called for full cooperation i^ its 
observance as aid to maximum utilization of railroad facilities. 

1 - 2608 -nobu-pun-wp- 

X-7888 






Exhibit XV - A. First Quarterly Report, 

Office of Price Administration. 

Submitted Separately. 


Exhibit XV - B. Second Quarterly Report, 

Office of Price Administration. 


Submitted Separately. 


Exhibit XV - C. Third Quarterly Report, 

Office of Price Administration. 


Submitted Separately. 
























































( 




































O.P.A. - Exhibit XVI 


i 


UNITED STATES GOVERNMENT WAR EXPENDITURES AND FEDERAL 
RESERVE INDEX OF INDUSTRIAL PRODUCTION 


War Expenditures Index of Industrial 

(millions of dollars) Production b/ 



1940 

1941 

1942 

1940 

1941 

1942 

January 

132 

612 

2172 

122 

140 

171 

February 

129 

630 

2389 

116 

143 

172 

March 

143 

812 

3006 

113 

147 

172 

April 

159 

833 

3439 

113 

144 

173 

May 

164 

908 

3832 

117 

154 

174 

June 

153 

899 

4099 

122 

159 

176 

July 

200 

1016 

4688 

122 

160 

178 

August 

224 

1285 

5158 

124 

160 

183 

September 

262 

1554 

5459 

127 

161 

186 

October 

325 

1838 

5722 

131 

164 

190 

November 

405 

1540 

6112 

134 

167 

194 

Deoember 

507 

1896 

6125 

138 

167 

196 p 


t/ After July 1940 includes Government corporation war expenditure on a net basis* 
Before July 1940, figures are for War, Navy, and U. S. Maritime Commission 
expenditure only, and are listed as "National Defense" in Treasury Bulletin# 

b/ Adjusted for seasonal variation. 1935-39 average - 100# These figures are 
slightly revised and it is expected that they will be published in the 
February issue of the Federal Reserve Bulletin. They were obtained by phone 
from the Federal Reserve Board, January 27 , 1943. 

l/ Preliminary. 




l-aesa-HOBu-pu-wp 











' 





. 









1 

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' 












OPA Exhibit XVI - 2 


Table 2 . 

GROSS NATIONAL PRODUCT IN THE UNITED STATES, 1939-1942 

ANNUAL RATES BY QUARTERS 

(Billions of Dollars, Adjusted for Seasonal Variation) 



im 

1940 

1941 

1942 

r erage 

38.1 

97.1 

119.5 

156.3 

First Quarter 

35.1 

94.9 

110.4 

136.3 

Second Quarter 

86.2 

94.5 

115.9 

14S. 2 

Third Quarter 

83.2 

96.1 

124.4 

159.7 

Fourth Quarter 

92.9 

102.6 

127.0 

181.0 


Source: 1939-1941, Deoartment of Commerce. 

1942, Office of Price Administration* 


1-2618 nobu-pun-wp 













PRODUCTION AND INCOME 

1923 - 1939 



SOURCE: Industrial Production: Federol Reserve office of price administration 

Board Index. INCOME STATISTICS. division of research 

Per Capita Income: Department 01 N0 2798 

Commerce, Income Statistics. 
























































The Following 19 Pages Contain 



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voluntary Dry Colors Affirmed GMFR levels, denying generally 

agreement requested increase of 10#. 
































ORA Exhibit XIX - 1 


SUBSIDIES BEING PAID BY FEDERAL GOVERNMENT 
TO OFFSET PRESSURE OF INCREASED TRANSPORTATION 

The following paragraphs describe the important subsidies cur¬ 
rently being paid by Federal Agencies to counteract the pressure 
exerted by higher transportation costs upon OPA price ceilings. 

Trans port at ion Subsidy for East Coast Bituminous Coal 

At the present time, Defense Supplies Corporation and the War 
Shipping Administration are absorbing the increased costs of trans¬ 
porting bituminous coal from Hampton Roads, Virginia to the New Eng¬ 
land and New York City areas. In peacetime, such shipments of bitu¬ 
minous coal were made by tide-water, the cost being much less than 
by rail. With the outbreak of submarine activity along the shipping 
routes, the amount of coal which could be shipped by water fell sub¬ 
stantially. Much coal for the New York City and New England areas 
consequently had to be shipped by rail, thus causing sharp increases 
in costs. The cost of shipping that coal which still went by water 
likewise rose substantially, because of higher insurance costs and 
more expensive handling. These increased transportation costs could 
not be absorbed by the receivers of coal without puncturing existing 
price ceilings, which had been fixed at the wholesale and retail 

levels on a December 1941 basis. 

Two government agencies agreed to absorb the increased trans¬ 
portation costs in order to provide supplies of coal for New York 
City and New England areas at stable prices. 

To offset the increased railway transport costs, the Defense 
Supplies Corporation compensates New York and New England receivers 
of southern bituminous coal for the increased transportation costs 


1-2599 P7 nobu 











OPA Exhibit XIX - 2 


involved in moving coal by rail instead of by tide -water. The 
amount of the adjustment consists of the difference between the 
rail transportation costs actually incurred and the cost of bring¬ 
ing southern bituminous coal by tide-water at December 15-31, 1941 
rates. A similar adjustment is made for coal moved by rail in com¬ 
bination with small vessels or barges. The Defense Supplies Cor¬ 
poration also compensates New York and New England receivers who 
formerly used coal from southern fields but are nov/ dependent upon 
supplies from northern fields. In these cases the compensatory 
adjustment consists of the difference between transportation costs 
from the basic Clearfield, Pennsylvania district and the cost of 
bringing southern coal by tide-water routes at December 15-31 freight 
rates. 

To reduce the transportation cost of water-borne coal, the War 
Shipping Administration has reduced rates for transportation over 
the tide-water route to levels that prevailed during the last two 
weeks of December 1941. The reduced rates do not cover the costs 
of shipment and insurance and, therefore, involve a loss to the War 
Shipping Administration. 

Transportation Subsidy for Petroleu m Products 

The cost of transporting petroleum and petroleum products to 
the East Coast increased sharply as a result of substitution of rail¬ 
way transport for tanker shipment, necessitated by the submarine war¬ 
fare off the Atlantic Coast and the diversion of petroleum tankers 
to use by the armed forces. As in the case of bituminous coal, and 
for similar reasons, the extra cost of rail transportation to the 


1-2599 P8 nobu 





















\ 




V 







OPA Exhibit XU - 3 


the East Coast, as compared wit}h the former tanker cost, is absorbed 
by the Defense Supplies Corporation. 

Sim ilarly, the V/ar Snipping Administration absorbs ocean freight 
rates in excess of basic charter rates in effect on January 20, 1942. 
This agency also provides war risk insurance at the level of rates 
prevailing on January 20, 1942. The purchasers of petroleum pay, 
in effect, the January 20, 1942, basic charter rates and her Shipping 
Administration absorbs all costs in excess of these rates. 
Transportation Subsidy for Sugar 

The disturbance to normal services of supply of sugar caused by 
the war made abnormal transportation of that product necessary. In 
order to prevent a break in the ceiling price, which would otherwise 
have been necessary, and to equalize the burden of the increased 
transportation costs for different parts of the country, the Defense 
Supplies Corporation absorbs the increased transportation costs above 
pre-war levels on both domestic and Imported sugar. The absorption 
applies to Cuban, Porto Rican and Hawaiian sugars and also to domes¬ 
tic sugars, both beet and cane. 

On application of the sugar refineries to the Defense Supplies 
Corporation, the latter will pay to refineries the following charges. 

1. i he difference between the ocean freight rate to the port 
of entry and the rate which existed during December 1941. 

2# Any increased rail or barge freight resulting j.rom a diver¬ 
sion of shipping from normal routes. 

3. Extra handling costs at transportation points. 

4. Losses resulting from a reduction in weight by reason of 
trans-shipment. 


1-9RQQ PQ nobu 








































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OPA Exhibit XIX - 4 

I 

In certain cases v/here it is customary for the producers to pay 
the freight charges to the refineries, the refineries reimburse the 
producers for their added costs out of the money remitted to them by 
the Defense Supplies Corporation. 

All importers are required to use War Shipping Administration 
rates which in themselves involve a substantial subsidy, since they 
are considerably lower than private commercial rates. 

Transportation Subsidy for Coffee 

A subsidy is now being paid by the Commodity Credit Corporation 

I 

in order to maintain the normal supply and distribution of coffee 
without piercing the price ceiling. Almost half of this subsidy is 
occasioned by increased domestic rail transportation costs arising 
from the diversion of shipping from normal ports of entry. Seventy- 
five percent of this element of increased cost is subsidized. Addi¬ 
tional amounts offset increased costs for war risk insurance not ■ 
covered by the War Shipping Administration, and increased ocean 
freight and marine insurance charges occurring since December 8, 1941* 
These amounts do not include the subsidy represented by War Shipping 
Administration war risk insurance rates, which, as in the case of 
many other products, are well below estimated insurance costs. 
Transportation Subsidies for Imported Commodities 

The increase in war-risk insurance rates since the entrance of 
the United States into the war threatened to break OPA price ceilings 
on a great many imported commodities. OPA consequently sought the 
aid of the War Shipping Administration to obtain a reduction in war- 
risk insurance rates to a level which would facilitate the mainten¬ 
ance of ceiling prices on a number of important commodities. 


1-2599 PIO nobu 





















' 






























OP A Exhibit XIX - 5 


The War Shipping Administration is the prime war-risk insurer 
of the commodities it subsidizes. The subsidy consists of its 
absorption of any excess of paid claims above the income received 
from its premiums. In this manner the War Shipping Administration 
now subsidizes 20 commodities, such as wool, tea, unmanufactured 
tobacco, and drugs, by charging war risk insurance rates at January 1, 
1942 levels. Nominal rates, lower than those of January 1, 1942, have 
been established on five commodities, including cocoa beans, coffee 
and cane sugar. 

A small subsidy is paid by the Commodity Credit Corporation on 
imported cocoa in order to absorb increased war-risk insurance costs 
not paid by the War Shipping Administration, and increased ocean freight 
surcharges and marine insurance costs. 

The Defense Supplies Corporation subsidizes imported henequin 
and British East Africa sisal. Of this subsidy, almost half is used 
to absorb increased rail transportation and war-risk insurance costs. 

The same agency absorbs increased transportation and war-risk insur¬ 
ance costs of Chilean nitrate imports. 

/ In order to secure the maximum practicable importation of stra¬ 
tegic metals without piercing price ceilings, the Metals Reserve Cor¬ 
poration pays subsidies on imported copper, tin, mica, and antimony. 
These subsidies are primarily for the purpose of absorbing increased 
rail transportation, war risk insurance, and ocean freight surcharge 
costs above normal levels. 






1*2509 PH nobu 










O.P.A. Exhibit XX- 


TABLS I 


Indexes 


of Corporate 
(Base: 


Profits, '."ages and Net Farm Income 
1936-39 average » 100) 



Corporate 

Profits 

Before Taxes 

Corporate 

Profits 

After Taxes 

Wage and 
Salaries 

Net Farm 
Income 

1936 

114. 

118. 

94. 

99. 

1937 

115. 

II 60 

106. 

113. 

1938 

52. 

44. 

97 c 

93. 

1939 

118. . 

121.5 

104. 

96. 

1940 

164 . 

155, 

115. 

100. 

1941 

332 . 

238. 

144 0 

141. 


(437. 

(235. 



1942 

( 460 . 

( 247 . 

183. 

201. 


Sources: 

Corporate Profits : 1936-1940 from the Bureau of Internal Revenue. 

1941 and 1942 estimated from various sample studies, 
and their past relationship to total corporate profits 
and the gross national product. Corporate profits 
here used exclude intercorporate dividends. 

Wages and Salaries : United States Department of Commerce. 1942 estimated 

on basis of first nine months. Wages and salaries 
as here used exclude work relief wages. 

Net Farm Income : Eureau of Agricultural Economics. Excludes income 

from agriculture received by persons not on farms 
and includes government benefits. 














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§ 

o 

CO 


1-2598-HOBTJ-PO-WP 


Commerce Commission. 

Other corporations: From 1936 to 1940, inclusive — Statistics of Income . Bureau of 
Internal Revenue; 1941 and 1942 estimated by OPA Statistical Branch. 














OPA EXHIBIT XL 


Q|_|Apy 2 

PROFITS BEFORE FEDERAL INCOME TAXES 

RAILWAY, INDUSTRIAL AND PUBLIC UTILITY CORPORATIONS 

1936 - 1942 



INDEX 

(1936-1939=100) 

2000 - 


1800 


1600 


1400 


1200 


1200 


600 


400 


200 


-200 


1942 

Estimated 


-200 


1400 


1000 


800 - 


1000 


800 


600 


Transportation and 
Public Utilities 


1936 1937 1938 1939 1940 1941 


INDEX 

(1936-1939=100) 

—I 2000 


I 800 


1600 


Class / Railways 


Mining and 
Manufacturing 


400 


Trade and Service 


200 


SOURCE: Railways: Statistics of Railways in the United States, 

Bureau of Statistics, Interstate Commerce Commission. 

Other corporations From 1936 to 1940, inclusive —Statistics of Income, 

Bureau of Internal Revenue; 1941 and 1942 estimated by OPA Statistical Branch. 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO S230 


1-7*1 nou*-T»J»*-*r' 



















































, 

_ 











OP A EXHIBIT XXI 


TABLE I 

INCREASES IN PRICES PAID BY RAILROADS 


WDRLD THAR I AND WORLD WAR II 


Y 



Percenta 

ge Price 

Increases 

Item 

1910-14 to I$T 

10-14 to 

1936-39 to 


1917 

1918 

1942 2/ 

Road and Structures: 




1* Ties 

12 

33 

31 

2* Rails 

21 

48 

2 

3* Other track material 

98 

110 

4 

4* Ballast 

14 

40 

13 


Equipment: 




5* Steam locomotives 

45 

89 

20 

6* Other locomotives 

37 

84 

8 

7. Freight-train cars 

83 

145 

18 

8. Passenger ears 

32 

64 

14 

1/ 




Fuel: 




9* Coal 

95 

63 

10 

10* Fuel oil 

40 

99 

17 

11* Gasoline 

35 

38 

25 


l/ All data furnished to OPA by the Interstate Comae roe Commission, Bureau 
of Valuation, exeept for World War I fuel prices, which are based on 
data from the Bureau of labor Statistics and the American Association 

of Railroads* 

2/ Estimated on the basis of 9 months data. 

V Fuel price changes for World Wdr I and World War II are based on 1914 
1939 respectively. 


1-257 5 


























' 



















































































\ 






























































































. 





















































CHART 1 


O.P.A. EXHIBIT XXI 


INCREASES IN PRICES PAID BY RAILROADS 

WORLD WAR I AND U y 


%■?- . ' '• •£} 

w 1910 - 14 to 1917 

: 

- 336-37 r 0 I942-® 



ROAD AND STRUCTURES 0 io 


Tires..—. 


PERCENTAGE PRICE INCREASES 

20 30 40 50 60 70 


EQUIPMENT 


Steam Locomotives-.< 


Other Locomotives-< 


Freight-Train Cars 


Passenger Cars — 


Rails-—..< 


Other Track Material-< 


Ballast.. 



100 




I/All data furnished to OP. A. by the Interstate Commerce Commission, 

Bureau of Valuation, except for World War I fuel prices, which are based 
an data from the Bureau of Labor Statistics and the American Association, 
of Railroads. 

2/Estimated on basis of 9 months dato. office of price administration 

division of research 

3/Fuel price chonges for World War I and World War n are based on 1914 no ssm 

and 1939 respectively. 

SOURCE :interstate Commerce Commission, Bureau of Lobor Statisties. 


1-2596 PIS awu-f Js»l 





























































OPA Exhibit XXI - 2 


TABLE 2. 

RAILROAD MATERIAL PRICES 



(i) 

Material 

and 

Supplies 
(Other Than 
Fuel) 

(2) 

Fuel 
(Cosl & 
Oil) 

o) 

All Mate: 

May, 1933 

100.0 

100.0 

100.0 

June, 1939 

125.3 

135.4 

128.6 

December, 1939 

130.7 

134.3 

131.9 

December, 1940 

133.7 

135.1 

134.1 

December, 1941 

146.4 

148.4 

147.0 

June, 1942 

151.8 

152.6 

152.0 

December, 1942 

153.1 

152 .S 

153.0 


Source: 

Railway Age, 
January 2, 1943, 
Page 63 


1-2618 nobu-pun-wp 








OPA Exhibit XXI - 4 


CHART 2. 

average cost of coal and fuel oil 

CONSUMED BY RAILROADS 



Source: 

Railway Age, 
January 2, 1943, 
Page 87 


1-2618 nobu-pun-wp 











































OPA Exhibit XXI - 5 


CHART 3. 


COMPARATIVE TREND IN PRICES OF RAILROAD APPLIANCES 
JANUARY 1929 TAKEN AS 100 


120 

no 

100 

90 

80 

160 

150 

140 

130 

180 

110 

100 

90 

130 

120 

no 

100 

90 

150 

140 

130 

120 

no 

«M 




Brake Shoes 


















9 

80 

70 

60 

50 

40 

30 

120 

no 

100 

90 

no 

100 

90 

80 

100 

90 

80 

70 

60 

50 

no 

100 

90 

80 





_ 

- i i i i~r~ 











































































Boiler Lagging 








1 



































1 1-1- 






|- 





1 

1 



| 








-P- 

— 








— 

P-T- 









— 












— 

— 





—| I.i 1- 1 




y 



Roil Uoin+s 








_ 

—— 

- 1 , 1, l ... 


—1 




Insulated Wire 





—1 — 1—1— 









U.SCorTen 



h 




T*77 




•nm 




130 

120 

no 

100 

90 

130 

120 

no 

100 

90 

80 

70 

130 

120 

no 

100 

90 

120 

no 

100 

90 

80 

70 

120 

no 

100 

90 

170 

160 

150 

140 

130 

120 

110 

100 

120 

no 

100 

90 

140 

130 

120 

no 

100 

90 

130 

120 

no 

100 

90 

140 

130 

120 

no 

100 

90 














1— Z—i 


-J— 





l 1_1_1 


F=»= 


T" i "i::x 


Copper Cable 


1-LH 


Pressure Gage 


_ 




— 

n-. 



—1 



pT-i 




rc 

n 

T 




ft- 













— 

















Storage Batteries 








fl 





"1 ■ i ■ l 








Track Jacks 



































— 




— 










— 






















| 






_ 


Lanterns 


— 1 —1— 


—1— 1 -| > 1=1= 



Pumps !- j -1 ■ ■ 1 -* - 

1— 



1 1 i "H— 


Frogs [ 


l 






Brake Beams 

\ 


—i— 

—i ' 

















1 











1 













1530 1931 1932 1933 1934 1935 193c :S37 538 939 I94C 941 34? 


Source: 

Railway Ape, 
January 2, 19X3, 
Pape 91 


1-2618 nobu-pun.wp 

























































































































































































































































































































































































































OPA Exhibit XXI - 3 


Source: 
Railway 
J anuary 
Page 87 


CHART 1. 

COMPARATIVE TRENDS IN TRACK MATERIAL COSTS 






Rails 

“ 










*1 






1 






- •> 







100 


I 



f 









— 

1 


1 

. 


Tie Plates 

1] - 1 




1 — V 


--1- 

-rr 




1? J* 100 

“L 

rJ 1 1 









. 

Track Bolis 







i 

L 










J 






'i 


—1_ 



r 







19?? 

= 10C 






















1 

L 


10C 

90 


track ipikes 

j 

J 





1 

[ 








1 




1 1 












- 

1930 

•HO u 

1931 ; 193? , 1934 

1535 

193b 

1937 

1538 

r 1 

1935 i 1940 j 1941 

1947 








Age, 

2, 1943, 


1-2618 nobu-pun-wp 



















































































OPA Exhibit XXII 
Page 1 of 3 pages* 

FEDERAL COMMUNICATIONS COMMISSION PRESS RELEASE 

Washington, D* C. (65925) 

January 20, 1943 


LONG DISTANCE TELEPHONE RATES REDUCED $50,700,000 


The Federal Communications Commission announces that the 
American Telephone end Telegraph Company has agreed upon reduc¬ 
tions in telephone rates which will result in a lov/ering of the 
present annual revenues of the Long Lines Department of the Com¬ 
pany by an estimated $50,700,000. Approximately $34,700,000 
represents immediate savings to the public. The reductions do 
not apply to initial three-minute conversations but affect the 
cost of the time over three minute-s (over-time) end the cherges 
for leased line services. 

It is expected that there will be no increase in the num¬ 
ber of ordinary long distance calls since no reduction in the 
costs of these is made. 

Benefits will largely flow to the taxpayers. The reductions 
will lower the cost to the Government during war time both direct¬ 
ly by cutting the Governments telephone bill and indirectly by 
cutting the telephone bill of the war industry. The United States 
Government leeses 43$ of private telephone and telegraph lines, 
charges for which will be reduced by $11,900,000. The cut in the 
over-time rates from the present 1/3 to 1/4 of the rate for the 
initial three-minute period, estimated to result in savings of 
$22,800,000, again will largely benefit the Government, as the 
largest single user of long distance telephone service, as well as 
war industry generally. It is to be emphasized that there is no 
reduction in the rate for the regular three-minute call. And the 
public is again requested not to make unnecessary long distance 
calls. 


Thus, the reductions announced are in conformity (l) with 
the Government-policy against inflation, end (2) with the policy 
of avoiding an increase of civilian traffic and the consequent im¬ 
peding of war messages. 

All persons or organizations using leased private lines, in¬ 
cluding newspapers and broadcasting stations, benefit substantial¬ 
ly from the reductions, which are equivalent to approximately 25 
per cent in private telephone lines end 35 per cent in private 
telegraph lines. The small broadcasting stations, as the casual 
users of telephone lines, will benefit from a lowering of the 


1-2610 PI of 3 nobu-pun-co-wp 






jr 


OPA Exhibit mi 
Page 2 of 3 pages. 


initial rate per hour for line costs by approximately 50 per cent. 
Larger broadcast users *111 benefit by a reduction from $8 to $6 
per air line mile. 

• 

Chairman James Lawrence Fly of the Commission said: 

"I believe this agreed settlement accomplishes some 
highly desired results. The importance of the exten¬ 
sion of the great benefits of network broadcasting to 
the small and remote radio stations of this country 
can hardly be over-emphasized; they are an essential 
part of our modem system of mass communication and 
every effort ought to be made to preserve these snail 
stations and to improve the service they are rendering 
to the public. I think, too, the benefits to the 
press of the Nation and to the Nation, itself, in mak¬ 
ing more economical the free flow of news and infor¬ 
mation is of real significance. 

"It is also heartening to see these adjustments sub¬ 
stantially lower the cost of carrying on the war with¬ 
out in any way encouraging an undesirable increase in 
nonessential telephone conversations. 

"Commissioners Walker, Wakefield and Durr have done 
a good job in negotiating the adjustments. Mr. Gifford, 
President of the American Telephone and Telegraph Com¬ 
pany, and the other officials of the Bell System have 
cooperated in achieving these results and in avoiding 
the unnecessary expenditure of manpower and funds in 
the course of extensive proceedings snd litigation. 

"The settlanent also recognizes the great interest of 
the State Commissions and of the independent companies 
in the charges in question, and the counsel and advice 
of the State Commissioners has been most helpful. It 
may be true that this is not an ideal settlement of an 
important and intricate problem; however, under all of 
the circumstances, at this crucial juncture, I cannot 
but feel that it is over all a wholesome settlement and 
represents very constructive gain from the public point 
of view." 

Hearings scheduled for Thursday, January 21, will be canceled, 
and upon filing of the appropriate tariffs the proceedings will be 
dismissed. The proceedings were instituted by an order from the 
Federal Communications Commission issued on November 21, 1942, ask¬ 
ing the American Telephone and Telegraph Company to show cause why 
its toll rates and other charges should not be substantially 


1-2610 P2 nobu 




OP A Exhibit mi 
Page 3 of 3 pages. 

reduced. The Office of Price Administration intervened in the pro¬ 
ceedings, recognizing the importance of any action of the FCC which 
could aid in the prevention of inflation. The OPA stated that the 
entry of an order predicated on excess earnings of the Company would 
contribute materially to its broad program of controlling costs. 

Following the hearings which took place in the Commission's 
offices on December 16 and 17, 1942, representatives of the Telephone 
Company and the Commissioners presiding (Commissioners Paul A. 

Welker, Ray C. Wakefield, and Clifford J. Durr) conferred with the 
objective of obtaining a satisfactory settlement. During the nego¬ 
tiations the FCC also conferred with State representatives. 

The reductions are applied to the following present going 
rates of the Long Lines Department: 

1. $11,900,000 to private line telephone and telegraph 
and program rates, effective February 1st to Long 
Lines and March 1st for the Associated Companies' 
interstate service; 

2. $11,200,000 - increased share of connecting car¬ 
riers' (Associated Companies and Independent Compa¬ 
nies) divisions of long lines revenues on the present 
board-to-board basis. This increased share will be 
retroactive to January 1st. 

3. $13,700,000 - increased share of connecting carriers' 
divisions of interstate toll revenues upon a station- 
to-st8tion basis, to become effective as of the date 
of filing of appropriate tariffs which will be with¬ 
in two or three weeks. 

4. $22,800,000 reduction in the over-time rate per min¬ 
ute from approximately one-third the initial period 
rate (initial period rates of over 30 cents) to one- 
fourth on Long Lines and Associated Companies inter¬ 
state business, to become effective February 15th 
for the Long Lines and March 1st for the Associated 
Companies. 

/ 

(These figures include some overlapping reductions due to the rela¬ 
tionship of the American Telephone and Telegraph Company and the 
Bell System Companies.) 


1-2610 P3 nobu-flnal 





y 


TABLE 1. 

EFFECTS OF A 10 PERCENT PRICE INCREASE 


A 10 
estimates 
consumers 
given: 


percent increase in prices would, on the basis of 1942 
of consumers* expenditures, have increased the cost to 
of the following groups of commodities by the amounts 


Item 


' "TIT- 

Per Family 
Per Month 
(dollars) 

. \ 2 ) 

Total 

(millions 

of 

dollars) 

1. 

Footwear 

#0.35 

$170 

2. 

Coats and wraps 

.29 

140 

3. 

Women's suits and dresses 

.31 

150 

4. 

Men's suits and trousers 

.27 

130 

5. 

Underwear 

.19 

90 

6. 

Hose 

.17 

80 

7. 

Meats, seafood, and poultry 

1.21 

580 

S. 

Eggs 

.23 

110 

9. 

All food 

5.25 

2,520 

10. 

All clothing 

2.13 

1,020 

11. 

All consumer goods and services 

14.17 

6,800 


% 


1-2608-nobu-p un-wp- 












OPA Exhibit X2IV-A 

4 


O.P.A. Refusal to Grant Requested Increase 
in Maximum Prices for Cleerottfifl 


MFR No. 62 established cigarette prices as of December 26, 
I9I4.I, and disallowed a price increase which had been announced by the 
American Tobacco Company. It was found that, while the current costs 
of producing and selling standard-price cigarettes were from 10 to 16 
cents per thousand (or between 2 and 3 percent) higher than they were 
in the preceding year, more than half of these high costs would be 
offset by an increase in sales of around 20 percent. An CPA Report, 
dated March 24, 1942, concluded that: 

"The average profits of manufacturers of standard price 
cigarettes have been* fairly consistent in the neighborhood 
of 55 to 60 cents per thousand cigarettes. This unit rate 
of profits must new be reduced, of course, by the cost in¬ 
creases which have been discussed above. However, even 
with these cost increases, the average profits of the manu¬ 
facturers are at least I4.0 to U5 cents per thousand cigarettes, 
and it is estimated that the increased volume of sales at 
this rate of profits serves to offset on the average more than 
half of the decline in total net profits caused by the cost 
increases. * * * 

"It thus appears from the figures of the manufacturers in¬ 
vestigated, which constitute about 95 percent of the industry, 
that, in spite of the recent cost increases, the cigarette 
industry will continue to make very substantia l profits." 

"John E. Hamm, 

Acting Administrator." 



1-2618 nobu-pun-wp 

























' 










* 







O.F. A. Exhibit XXIV - B 


OPA Refusal to Grant Price Increase 

on Fuel Oil 


Schedule 88 froze the prices of petroleum products at the 
October 1941 level. Major petroleum products are produced jointly, 
in a single operation which permits considerable shifting of product 
ratios with an insignificant change in costs. Historically, gasoline 
has been the chief revenue product, bringing the highest price of all 
products; fuel oil has been lower priced, and has been considered 
practically a by-product. Loss of the gasoline market, plus heavy 
demands for fuel oil, necessitated a shift in product ratios. The 
industry has asked OPA to increase the price of fuel oil in order to 
compensate for the loss of revenue. OPA has refused to do this until 
such time as the industry is able to show a "hardship" under the 
1936-1939 profits criterion. 

The decline in gasoline yields and the increase in fuel oil 
output is evident from the following table: 


Percentage Refinery Yields from Crude Oil 

U. S. Average 


Product 

1936-39 

Average 

19U 

Average 

_1242 

First 

Quarter 

Third 

Quarter 

Gasoline 

44.4 

44.1 

40.6 

39.1 

Distillate fuel oil 

18.0 

18.5 

19.3 

19.8 

Residual fuel oil 

26.5 

24.9 

27.2 

27.6 

Asphalts 

2.1 

2.5 

2.2 

3.1 

Other Products 

8.3 

9.4 

10.1 

9.6 

Loss 

.7 

.6 

.6 

.8 


Based on average ceiling prices for major products, the 1941 
ratios would return an average gross refinery realization of $1.92 per 
barrel of throughput, whereas third quarter 1942 ratios would return a 
realization of $1.87 per barrel. Furthermore, production has declined; 
during the first 10 months of 1941 average daily throughput was 3,825,000 
barrels, as compared with a daily average of 3,645,000 barrels in the 
same period of 1942. In 1941, 79 petroleum corporations reported profits 
before taxes exactly double their 1939 level; however, for the first nine 
months of 1942, 30 reporting corporations showed profits before taxes 
unchanged as compared with the same period in 1941* 


1-2618 nobu-pun-wp 


















































CHART I 


0 P A EXHIBIT TTV 


WHOLESALE PRICES 

CONTROLLED AND UNCONTROLLED ' J 



1939 1940 1941 1942 


\J The commodity composition of eoch index is constont throughout 
and is bosed on the status of control on October 10, 1942 

. _ , OFFICE OF PRICE ADMINISTRATION 

2/ Excluding gos ond electricity division of research 

NO 3200 


SOURCE Bureou of Lobor Statistics and 
Office of Price Administration. 

x / 


noui-pi«i-»s> 




























CHART 2 


0 P A EXHIBIT XTg 


WHOLESALE PRICES IN FIRST WORLD WAR 

AND IN PRESENT WAR 

ALL COMMODITIES OTHER THAN FARM PRODUCTS AND FOODS 


INDEX 

280 


*914 _ 1915 _ 1916 1917 1918 1919 1920 


INDEX 
- 280 


260 


240 


220 


200 - 


I 80 


160 


140 - 


- J \—'260 

/ 


/ 


/ 


First World War f 

(July 1914 * 100 ) I 


/ 



A 


-f: -r 

s Present War 

f (Aug. 1939 = 100 ) 


\ 

- 1-1240 


f 


220 


200 


180 


160 


140 



120 


- 100 


1939 1940 1941 1942 1943 1944 1945 


SOURCE: Bureau of Labor Statistics and 
Office of Price Administration. 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO 2843 


1-25NI 





































\ 


\ 




CHART 3 


0 P A EXHIBIT TTZ 


WHOLESALE PRICES IN THE THIRD YEAR OF WAR 


FARM PRODUCTS, FOODS AND INDUSTRIAL PRODUCTS 

PERCENTAGE CHANGES 



ALL INDUSTRIAL FARM FOODS ALL 

PRODUCTS PRODUCTS COMMODITIES 


SOURCE: Bureou of Labor Statistics ond 
Office of Price Administration 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO. 2766 























































CHART 4 


0 P A EXHIBIT Tin T 




WHOLESALE PRICES 

THE EFFECTIVENESS OF PRICE CONTROL 

AVERAGE PERCENTAGE MONTHLY CHANGES IN INDUSTRIAL PRODUCTS 


PERCENT PERCENT 



SOURCE Bureau of Labor Statistics and 
Office of Price Administration 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO. 2785 

































CHART 5 


0 P A EXHIBIT TT7 


WHOLESALE PRICES 

THE EFFECTIVENESS OF PRICE CONTROL 

AVERAGE PERCENTAGE MONTHLY CHANGES IN INDUSTRIAL PRODUCTS 


PERCENT 
3.00 


2.50 - 


I 


MARCH 1941 TO 
SEPTEMBER 1941 


SEPTEMBER >94, 
TO MAY 194 2 


MAY 1942 TO 
OCTOBER 1942 


2.00 -: 




3 



'.I 






.v 


PERCENT 
3.00 



1.50 


100 - 




-.50 


OFFICE OF PRICE ADMINISTRATION 
DIVISION OF RESEARCH 
NO. 2782 


SOURCE Bureau of Labor Statistics and Office of Price Administration 


1-2'* 1 noui-;irt-*p 








































































X 















































O.P.A. EXHIBIT XXV 


CHART 6 

WHOLESALE PRICES IN FIRST WORLD WAR 

AND IN PRESENT WAR 




360 


340 


320 


300 


280 


260 


240 


220 


200 


180 


160 


140 


120 


I 00 


80 


UNITED STATES DEPARTMENT OF LABOR 
BUREAU OF LABOR STATISTICS 































































, 

" 

- 


























. 




































































































. 

































































0. P. A EXHIBIT 77V 


CHART 7 


WHOLESALE PRICES IN FIRST WORLD WAR 

AND IN PRESENT WAR 

NDEX 1914 1915 1916 1917 1918 1919 1920 

260 


240 


220 


200 


I 80 


160 


140 





METAl 

_S 


— 

























\ ^ 





FIRST WAR ^ 

JULY 1914 = 100 



/ PRESENT WAR 

n AUGUST 1939 = 100 


If M 1 

/_ 


120 


100 


8 O 4 UG 

1939 


1940 


1941 


1942 1943 1944 1945 


UNITED STATES DEPARTMENT OF LABOR 
BUREAU OF LABOR STATISTICS 













































O.P.A. Exhibit XXV - B 
Page 1 

Table I 

Upward Revisions in UPA Price Ceilings 

Arising From Increased Freight Rates 


Maximum Price Regulation 


No. 

Title 

Effective 

Date 

Summary 

136, A-l 

Machines and Parts 

5-13-42 

Increase in freight rates of 


roughly 6 percent as a result 
of the ICC order of March 18, 
1942, permitted to be passed 
on to consumers. 


122 

Solid Fuels 

5-18-42 

n n it n it 

144 

Agricultural Insecticides 
and Fungicides 

5-18-42 

Any increase in transportation 
costs incurred by seller after 
the last day of the base period 
month used in calculating maxi¬ 
mum prices may be passed on to 
consumers. 

i—1 

i 

<4 

•N 

Iron and Steel Scrap 

3-18-42 

Sellers may pass on to con- 


sumers the increased trans¬ 
portation charges—estimated 
at roughly 6 percent—effected 
by ICC order of March 18, 1942. 

189, A-l Bituminous Coal Sold for 8-1-42 Suppliers at tidewater may 

Direct Use as Bunker Fuel increase maximum prices by 

the amount of the railroad 
freight increases which 
occurred between Jan. 15 and 
Apr. 30, 1942. This corrects 
an inequity between seaboard 
and Great Lakes Ports. The 
ceilings at Great Lake ports 
reflected the March 1942 
freight rate increases inas¬ 
much as they were based on 
prices prevailing Apr. 15-30, 
1942, whereas tidewater sales 
were based on prices prevail¬ 
ing Jan. 1-15, 1942. 


1-2575 


/ 













' 











- 2 - 


- 

No. Title 


224 Cement 


44 (Rev.) Douglas Fir Doors 
A-l 


6) Clari- Iron & Steel Products 
49) fication Resale of Iron & Steel 
Products 


O.P.A. Exhibit XXV - B 
Page 2 


Effective 

Date _ Summary _ 

9-23-42 Permits producers to increase 
their maximum prices by the 
amount of freight rate increase 
subsequent to March 1942. Under 
MPR 138 maximum prices for 
cement were established as the 
seller’s highest March 194-2 
price. Cement manufacturers 
normally sell on the basis of a 
delivered price. The March 1942 
ceiling prices did not reflect 
the freight rate increase. 
Dealers were also permitted to 
pass on the increase. 


10-10-42 Higher transportation costs 
caused by increased freight 
rates may be included in the 
manufacturer’s selling price. 

This provision brings the regu¬ 
lation into conformity with 
price regulations for other 
lumber products (Rev. PS 44 
gives the purchaser the privilege 
of requiring that sales be made 
upon an f.o.b. basis. Vihere 
sales are made on an f.o.b. 
shipping point basis, freight 
rate increases are passed on 
automatically). 

5-5-42 In a clarification of the effect 
5-5-42 of the 6 percent freight rate 
increase on the prices of iron 
and steel products, OPA stated 
that the increases may be added 
to the prices of outgoing ship¬ 
ments where freight is a component 
and declared part of the maximum 
price. 











/ 



























O.P.A. EXHIBIT XXVI - A 


EXHIBIT 


Excerpts from British Command Paper 
6314, September 1941, entitled 
" Government Control of Railways ," 

Outlining the revised financial arrangements 
between the Minister of War Transport, the 
four Amalgamated Railway Companies and the 
London Passenger Transport Board: 


Paragraph 2 

"In view of the Government’s decision to introduce 
legislation placing all public utility undertakings upon 
the same basis as regards war damage and in pursuance of 
the policy announced in the Budget Speech of minimising 

the impact of increased costs or transport upon the prices 

of essential goods and services, the Government and the 

four Amalgamated Railway Companies and the London Pas¬ 
senger Transport Board have agreed that the existing 
financial arrangements should be modified and, as a result 
of negotiations, the arrangements have been revised," 
(underscoring supplied) 


Paragraph 10 

"The levels of rates, fares and charges will be 
determined by the Government during the period of control 
and the arrangement (paragraph 10 of Cmd, 6168) requiring 


them to be adjusted to meet variations in working costs 


and certain other conditions arising from the war, 

including war damage up to LlO millions in any year, will 
cease to have effect," (underscoring supplied) 

















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EXHIBIT XXVI - B 


Excerpt from Bulletin No. #8, dated December 10, 

1941 to all Administrators of the Wartime Prices 
and Trade Board from Donald Gordon, Chairman. 

"Re: Railway Rates" 

3 • "No increases in the general rate structure will be per* 
mitted, although there will no doubt continue to ce a number of 
minor variations approved by the Board of Transport Commissioners 
and certain international rates may have to be adjusted if change 
are made in the United States rates." (Underscoring supplied) 















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